Should the firm undertake the investment

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Reference no: EM131594605

We have a project which gives us $1 million net cash flow, which will continue for 5 years. The interest is $.25 million. The yield to maturity is .10 and the cost of equity is .2. The market value of debt is $10 million , while the market value of equity is $20 Million.

The cost of the project is $3.5 million. Should the firm undertake the investment?

Reference no: EM131594605

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