The following show four mutually exclusive investments.Which is the best investment?
A) Initial investment: $1.1 million; Cash flow in year 1: $160,000; Annual Growth Rate: 2%; Cost of Capital: 9.0%
B) Initial investment: $1.2 million; Cash flow in year 1: $150,000; Annual Growth Rate: 2%; Cost of Capital:7.0%
C) Initial investment: $1.3 million; Cash flow in year 1: $160,000; Annual Growth Rate: 1%; Cost of Capital: 6%
D) Initial investment: $1.4 million; Cash flow in year 1: $150,000; Annual Growth Rate: 2%; Cost of Capital: 8%
E) Initial investment: $1.5 million; Cash flow in year 1: $160,000; Annual Growth Rate: 1.5%; Cost of Capital: 7%
Correct Answer:
Verified
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