What will be the change in the value of your firm

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Your factory has been offered a contract to produce a part for a printer. The contract would last for 3 years and your cash flows from the contracts would be $5.18 million per year. Your upfront setup costs to be ready to produce the part would be $7.89 million. Your discount rate for this contract is 7.9%. a. What does the NPV rules say you should do? b. If you take the contract, what will be the change in the value of your firm?

Reference no: EM131329576

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