Jules starts a company and negotiates with an investor who


Jules starts a company and negotiates with an investor who offers the following two deals: A. Get $100,000 today and pay back $120,000 a year from today. B. Get $200,000 today and beginning a year from today, pay 5% of your profit every year (assume you expect to make $500,000 per year for the foreseeable future) a) What is the internal rate of return of taking deal B? b) Prove that NPV and IRR leads you to choose the same alternative if the market rate is 21%.

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Financial Management: Jules starts a company and negotiates with an investor who
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