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Christian owns a private firm and is looking to raise $2M for a project. He believes that the value of his firm without the project

Christian owns a private firm and is looking to raise $2M for a project. He believes that the value of his firm without the project is $10M. The NPV of the project is $2M. A private equity fund offers to provide $2M in equity investment in exchange for a 30% stake in the firm. Should Christian accept the financing and take the project?

A.

"Yes, because Christian's overall NPV is $1M"

B.

"No, because Christian's overall NPV is negative $1.3M"

C.

"No, because Christian's overall NPV is negative $1M"

D.

"No, because Christian's overall NPV is negative $0.2M"

E.

"Yes, because the NPV of the project is positive"

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