Firm be willing to wait until project starts generating cash

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Reference no: EM131585487

Consider a project that costs €1 million today but yields no returns for several years. Once the project becomes productive, it yields €250,000 annually forever. Suppose two firms are examining this project, a Japanese firm with a cost of capital of 7% and a U.S. firm with a cost of capital of 13%. Approximately how many more years than the U.S. firm would the Japanese firm be willing to wait until the project starts generating cash?

Reference no: EM131585487

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