Velma and Keota (V&K) is a that owns a small company. It is considering two alternative investment opportunities. The first investment opportunity will have a five-year useful life, will cost $19,680.96, and will generate expected cash inflows of $4,800 per year. The second investment is expected to have a useful life of three years, will cost $12,885.48, and will generate expected cash inflows of $5,000 per year. Assume that V&K has the funds available to accept only one of the opportunities.
Required
a. Calculate the of each investment opportunity.
b. Based on the internal rates of return, which opportunity should V&K select?
c. Discuss other factors that V&K should consider in the investment decision.
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