?Time: Investment? A: Investment? B: 0 A: – $2 million B: – $2 million 1 A: $600,000 B: $1,000,000 2
Time: Investment A:
Investment B:
0
A: − $2 million
B: − $2 million
1
A: $600,000
B: $1,000,000
2
A: $800,000
B: $800,000
3
A: $1,000,000
B: $600,000
An investor is considering the two investments shown above. Her cost of capital is 7%. Which of the following statements about these investments is true?
The investor should take investment A since it has a greater internal rate of return (IRR).
The investor should take investment B since it has a greater net present value (NPV).
The investor should take investment A since it has a greater net present value (NPV).
The investor should take investment B since it has a greater internal rate of return (IRR).
The correct answer is The investor should take investment B since it has a greater net present value (NPV). Please can you show step by step how to get this answer and not use excel thank you.
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