You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of

$ 10.2 million$10.2 million.

Investment A will generate

$ 1.98$1.98

million per year? (starting at the end of the first? year) in perpetuity. Investment B will generate

$ 1.57$1.57

million at the end of the first? year, and its revenues will grow at

2.8 %2.8%

per year for every year after that.

a. Which investment has the higher

IRR??

b. Which investment has the higher NPV when the cost of capital is

6.5 %6.5%??

c. In this? case, when does picking the higher IRR give the correct answer as to which investment is the best? opportunity?