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You have been offered a very long - term investment opportunity to increase your money one hundredfold. You can invest $ 1 0 0 0
You have been offered a very longterm investment opportunity to increase your money one hundredfold. You can invest $ today and expect to receive $ in years. Your cost of capital for this very risky opportunity is What does the IRR rule say about whether the investment should be undertaken? What about the NPV rule? Do they agree?
You are considering opening a new plant. The plant will cost $ million upfront. After that, it is expected to produce profits of $ million at the end of every year. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is Should you make the investment? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.
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