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Smuttynose Brewerey is considering two alternative lager beer brewing equipments: Bayerische Lager Brewer has an expected life of 3 years, will cost $ 5 million,
Smuttynose Brewerey is considering two alternative lager beer brewing equipments:
Bayerische Lager Brewer has an expected life of years, will cost $ million, and will produce net cash flows of $ million per year. Bohemian Lager Brewer has a life of years, will cost $ million, and will produce net cash flows of $ million per year. Smuttynose plans to serve the lager segment indefinitely. Inflation in operating costs is expected to be zero, and the companys cost of capital is percent. By how much would the value of the company increase per year if it accepted the project which creates more value for the firm?
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