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Question 4 Suppose a firm is considering a project with the following net benefit stream: Year Net Benefit (Market) 0 -700 1 200 2
Question 4 Suppose a firm is considering a project with the following net benefit stream: Year Net Benefit (Market) 0 -700 1 200 2 3 4 5 200 200 200 200 To undertake this project, the firm will open an overdraft account worth 50% of the initial cost in year 0. Calculate: a) The interest payments on the overdraft b) The stream net private benefits after interest c) The net present value of the private benefit.
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