Question
Ben realizes that if the yurts are popular, they can expand their markets into Eastern Europe by making an investment of $2 million in bribes
Ben realizes that if the yurts are popular, they can expand their markets into Eastern Europe by making an investment of $2 million in bribes and licenses in Year 5 after the yurt's success has been established. If Ben makes this investment, they can expect 5 years of the same cash flows they received in Years 1-5 in the U.S. market arriving in Years 6-10. Of course, if Ben chooses not to make the investment in Year 5, they will receive zero cash flows in Years 6-10. What is the expected NPV of the Yurt project now, considering this additional source of cash flows? Assume all cash flows are discounted at the 10% WACC.
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