A company has identified the following investments as

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A company has identified the following investments as looking promising. Each requires an initial investment of $1.2 million. Which is the best investment?

a.) a perpetuity that generates a cash flow at the end of year 1 of $100,000, has a growth rate of 1.25%, and a cost of capital of 10%.

b.) a perpetuity that generates a cash flow at the end of year 1 of $800,000 has a growth rate of 2.25% and a cost of capital of 12%.

c.) an investment that generates a cash flow of $400,000 at the end of each of the next five years, when the cost of capital is 6%.

d.) an investment that generates a cash flow of $200,000 at the end of each of the next ten years, when the cost of capital is 6%.

Reference no: EM13479121

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