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Lunatics, an e-commerce sports company wants to buy Rowdy Trading Cards at a cost of $504 million. Rowdy will operate for 20 years. They
Lunatics, an e-commerce sports company wants to buy Rowdy Trading Cards at a cost of $504 million. Rowdy will operate for 20 years. They expect annual cash flows from operations to be $70.1 million and its cost of capital is 12.1%. Compute the NPV at 12.1%, 2%, 17% and the IRR. Should Lunatics proceed with the purchase?
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