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An auto-parts company is deciding whether to sponsor a racing team for a cost of $1 million. The sponsorship would last for three years and

An auto-parts company is deciding whether to sponsor a racing team for a cost of $1 million. The sponsorship would last for three years and is expected to increase cash flows by

$570,000

per year. If the discount rate is

6.8%,

what will be the change in the value of the company if it chooses to go ahead with the sponsorship?

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