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You are considering expanding your internet router business. A $10 million dollar investment in equipment would be depreciated straight-line over 5 years. You could then
You are considering expanding your internet router business. A $10 million dollar investment in equipment would be depreciated straight-line over 5 years. You could then produce revenues of $4.4 million per year for 5 years, your variable costs would be $1 million per year, you face a 35% tax rate, and you are all equity financed. The beta of your equity is 1.1, the risk- free rate is 1%, and the expected market return is 8%. What category best fits the NPV for this investment
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