A US pharmaceutical company needs

$1,275,543

to set up a subsidiary in Canada. The overall floatation cost for this project is

3,25%

. A year from now, the subsidiary will generate revenue in uie tune of

$345,000

and revenues are expected to grow at a rate of

2.25%

annually. The WACC for the company is

12.12%

. Under what circumstances should the company accept the project?\ Only if the total revenue generated by the subsidiary is

$1,275,543

over the life of the drug.\ If the

PV

of future cash flows is at least

$1,318,391

.\ 3.3 and 4 above.\ If the PV of future cash flows is at least

$1,275,543

.\ If the PV of future cash flows is at least

$1,239,669

.

A US pharmaceutical company needs $1,275,543 to set up a subsidiary in Canada. The overall floatation cost for this project is 3,25%. A year from now, the subsidinry will gencrate revenue in ute tune of $345,000 and revenues are expected to grow at a rate of 2.25% annually. The WACC for the company is 12.12%. Under what circumstances should the company accept the project? 1. Only if the total revenue generated by the subsidiary is $1,275,543 over the life of the drug. 2. If the PV of future cash flows is at least $1,318,391. 3.3 and 4 above. 4. If the PV of future cash flows is at least $1,275,543. 5. If the PV of future cash flows is at least $1,239,669