You are deciding between two mutually exclusive investment opportunities. Both

require the same initial investment of $9.9 million. Investment A will generate $2.05 million per year​ (starting at the end of the first​ year) in perpetuity. Investment B will generate $1.42 million at the end of the first​ year, and its revenues will grow at 2.1% per year for every year after that.

a. Which investment has the higher​ IRR?

b. Which investment has the higher NPV when the cost of capital is 6.3%​?

c. In this​ case, for what values of the cost of capital does picking the higher IRR give the correct answer as to which investment is the best​ opportunity?

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