Should the firm complete the project

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Reference no: EM131875689

A firm considers building a new factory that costs $20 million. The factory will provide a cash flow of $5 million for 40 years, beginning next year. The firm wants to finance the project by issuing equity. Expected returns on the market are 19%, the riskfree rate is 5%, and the beta of the firm’s stock is 1.2. Should the firm complete the project?

Reference no: EM131875689

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