Firm is considering purchasing a factory

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A firm is considering purchasing a factory for $1 million. The factory will yield a cash flow of CF1 = $200,000 in one year, a cash flow of CF2 = $300,000 in two years, and then will be sold for CF3 = $900,000 in three years. The appropriate interest rate is 12%. Should the firm purchase the factory? Why or why not?

Reference no: EM13987754

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