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Noar Noar
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A month ago
North Pole Inc., a Canadian company, has an opportunity to invest in India. The project requires an immediate cash outlay of $2 million and is expected to provide after-tax cash flows of $600,000 in year 1, $800,000 in year 2, $1,000,000 in year 3, and $1,200,000 in year 4. The beta for a similar project in Canada is 1.2. The risk-free rate is 5% and the market risk premium is 7.5%. The risks of implementing such a project in India will require a risk premium of 4.5%. What will be the impact on the shareholder value of North Pole Inc. if the firm undertakes this project?

▸ $917,295 increase

▸ $285,564 increase

▸ $616,918 increase

▸ $527,358 increase
Textbook 
Corporate Finance

Corporate Finance


Edition: 5th
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tranle311tranle311
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A month ago
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