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Your firm is considering investing in a widget factory. The factory costs $2000 and is capable of producing one widget per year, forever, with zero
Your firm is considering investing in a widget factory. The factory costs $2000 and is capable of producing one widget per year, forever, with zero operating costs. Next years market price of widgets is expected to be $175 and this price is expected to grow at 2% per year. The appropriate discount rate is 11.5%. What is the NPV of the factory? Should your firm invest in this project?
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