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Joe's Satellite Repair (ISR) is a large widely held company that was recently overed a contract from NASA to repair the Bumble space telescope. Joe
Joe's Satellite Repair (ISR) is a large widely held company that was recently overed a contract from NASA to repair the Bumble space telescope. Joe will receive $50 million if the repair is successful and $10 million otherwise. Repairing the satellite is a tricky operation and the probability of successfully repairing the satellite is only 0.15. If Joe signs the contract, he will pay out $15 million immediately to be able to carry out the necessary repair procedure. The cash flow from NASA will be received in 1 year. The risk-free rate is 5%. The expected return on the market portfolio is 12%. What is the NPV of the project? (Your answer should be a number.) In particular, state the rate you are using to discount the project's revenues and why (be brief)
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