You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $9.6 million. Investment A will generate $2.17 million per year(starting at the end of the firstyear) in perpetuity. Investment B will generate $1.42 million at the end of the firstyear, and its revenues will grow at 2.1% per year for every year after that.

a. Which investment has the higherIRR?

What is Investment A IRR?

What is Investment B IRR?

b. Which investment has the higher NPV when the cost of capital is 5.9 %

c. In thiscase, for what values of the cost of capital does picking the higher IRR give the correct answer as to which investment is the bestopportunity?

a. Which investment has the higherIRR?