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Would you recommend the firm commit to this investment

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Reference no: EM131706663

A capital investment has a beta of 1.5. The market return is expected to be .15 and the risk-free rate is .05 over this time span. 

The investment requires an upfront cost of $1,000,000, and will generate end of year cash flows of $300,000 for four years (ie, four year annuity of $300,000). Would you recommend the firm commit to this investment?

Reference no: EM131706663

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