Assume that:

i$)$ RIVN is $100\%$ US$-$based firm AND

ii$)$ The risks RIVN is subject to in the next $10$ years will, in fact, be the risk RIVN will be subject to forever.

Assume that RIVN decides to buy a technology company in Estonia. The purchase will cost RIVN $$40$ mil at T$=0.$ In return, next year the new assets are expected to generate Free Cash Flows $($FCF$)$ of $$3$ million, and the FCFs are expected to grow at $1\mathrm{.}5\%$ per year forever.

In terms of required returns on the new investment, compared to the US assets of RIVN, the new Estonian assets are associated with extra risk premium of EITHER $+1\mathrm{.}25\%$ or $-1\mathrm{.}25\%($it is your task to figure out which option is FAR more likely $$ and work with that one option only$)$

A$)$ Should RIVN approve the Estonian company purchase? Why or why not?

Hint: This is not a philosophical question. Your answer must be based on numbers $($more specifically, ONE particular number$).$

B$)$ Assume the cost for the project could change. What is the highest value of the cost for which you would still recommend accepting RIVN$$s purchase of the firm in Estonia?

Hint: This is not a philosophical question. Your answer must be based on numbers $($more specifically, ONE particular number$).$

C$)$ Go back to the original costs of $$40$ mil., but assume the discount rates for the projects could change. What is the highest value of the discount rate for which you would still recommend accepting RIVN$$s purchase of the firm in Estonia?