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Two investments, C and D are being evaluated. They are mutually exclusive. Investment C has a higher NPV using any discount rate between zero and 9%, while D has a higher NPV using any discount rate between 9.1% and 15%. Which investment do you recommend the company undertake? The cost of both opportunities is the same. Which of the following is the BEST answer?
a. Recommend C if the required return is between zero and 9 percent.
b. Recommend C if the required return is between 9.1% and 15%.
c. Recommend C.
d. Recommend D.
In algebra, we often have to solve simultaneous differential equations. If the equations are linear and independent, there is a unique solution when the number of equations equals the number of variables.
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