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An investor has a budget of $35 million. He can invest in the projects shown below...

  1. An investor has a budget of $35 million. He can invest in the projects shown below or buy corporate bonds and earn 6%.  If the cost of capital is 8%, and all investments, including the corporate bonds, are of equal risk, what investment or investments should he make?

                                                    Initial Investment                        Cash flow

                        Project A              $35 million             $14 million per year for four years

                        Project B              $21 million             $10.5 million per year for three years           

                        Project C              $14 million             $7 million per year for four years      

                        Project D              $21 million             $7 million per year for five years       

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