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Cassius Chemistry is looking to invest in a production facility. Option one is a new state-of-the-art facility with a cost of $15 million. This new

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Cassius Chemistry is looking to invest in a production facility. Option one is a new state-of-the-art facility with a cost of $15 million. This new facility will produce cash flows of $5 million per year for the next six years. At the end of the sixth year, Cassius will have to reclaim the land under the new facility at a cost of $7 million. Option two is a used facility that will generate $4 million in cash flows for the next six years, but require no land reclamation. This used facility costs $15 million. If Cassius estimates its cost of capital to be 14.2%, which project should it accept? Why? Accept new facility; NPV 51.18 mil vs. $0.47 mil Accept new facility, NPV 54.34 mil vs. 50.47 mil Accept used facility; NPV 59.00 mil vs 5-2.66 mil Accept used facility: NPV 59.00 mil vs. $8.00 mil

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