​Two Mutually Exclusive Investments Cost $10,000 Each and Have the Following

question 19

Essay

​Two mutually exclusive investments cost $10,000 each and have the following cash inflows. The firm's cost of capital is 12%.​ $\text { Investment }$
$\begin{array}{cr}\text { Cash inflow: }&A&B\\\text { Year } & \\1 & \$ 12,407&-- \\2 & -- &--\\3 & --&-- \\4 & --&\$19,390\end{array}$
​
a. What is the net present value of each investment?
b. What is the internal rate of return of each investment? ost of capital is 12%.
c. Which investment(s) should the firm make? y> ost of capital is 12%.
d. Would your answers be different to c if the funds received in year 1 for investment A could be reinvested at 12%, 16%, or 20%?
​

---

Definitions:

Autoerotic Asphyxia

A self-administered procedure for suppressing breathing so that unconsciousness occurs. Usually releasing procedures are built in to reinitiate breathing upon unconsciousness. This loss of consciousness is sexually arousing to the participant.

Sexual Masochism

A sexual disorder characterized by the act of obtaining sexual pleasure through suffering physical pain or humiliation.

Gender Dysphoria

A condition where there is a dissonance between a person's physiological gender and their gender identity, causing significant distress.

Paraphilic Disorders

A category of psychiatric disorders characterized by intense and persistent sexual interests other than sexual interest in genital stimulation or preparatory fondling with phenotypically normal, physically mature, consenting human partners.