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Suppose ABI Construction is considering investing in a new project of urban development. The cost of bringing the project to market is 10M, but ABI

Suppose ABI Construction is considering investing in a new project of urban development. The cost of bringing the project to market is 10M, but ABI expects five years no incremental cash flows from the project to be $10M.

Using the calculated WACC in the previous question, What is the net present value of the project, and should ABI Construction go ahead with the project?" (WACC= 9.50%)

Answers:

a) NPV=28.4M, and ABI should NOT go ahead with the project.

b) NPV=-5M, and ABI should go ahead with the project.

c) NPV=5M, and ABI should NOT go ahead with the project.

d) NPV=28.4M, and ABI should go ahead with the project.

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