Murdoch corporation is considering investing in a project

Reference no: EM13858510

5. Murdoch Corporation is considering investing in a project which requires an outlay of $10 million in cash at the start, but is expected to generate revenues of $3 million at the end of one year, $4 million at the end of two years, and $5 million at the end of three years. The project will then be terminated, with no further revenues or costs.

There are no further costs after the initial outlay of $10 million.

Should this project be undertaken if the opportunity cost of Murdoch's capital is 10%? Why or why not?

(Show all calculations you used to arrive at your answer.)

Reference no: EM13858510

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