Deciding whether to sponsor a racing team

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Reference no: EM13956331

An auto-parts company is deciding whether to sponsor a racing team for a cost of $1 million. The sponsorship would last for three years and is expected to increase cash flows by $580,000 per year. If the discount rate is 7.5%, what will be the change in the value of the company if it chooses to go ahead with the sponsorship?

1) $508,305

2) $740,000

3) $808,786

4) $863,000

Reference no: EM13956331

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