Question
Your factory has been offered a contract to produce a part for a new printer. The contract would be for 3 years and your cash
Your factory has been offered a contract to produce a part for a new printer. The contract would be for 3 years and your cash flow from the contract would be $5 million per year. Your upfront setup costs to be ready to produce the part would be $8 million.
A.What does the NPV rule say you should do?
B. If you take the contract , what will be the change in the value of your firm?
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Quantitative Investment Analysis
Authors: Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto, David E. Runkle
3rd edition
111910422X, 978-1119104544, 1119104548, 978-1119104223
