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# Raising fund for company

A company has raised \$80 million from selling stocks. It wants to take part in a venture that requires \$40 million this year, its annual after tax cash flow over the next seven years will be only \$325,000. If it does invest in this venture it expects its after-tax cash flow to be minus \$10 million annually for the same period. How do you determine if this venture is a good deal when the discount rate is 12 percent?

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Please find my response in the attached file.

A company has raised \$80 million from selling stocks. It wants to take part in a venture that requires \$40 million this year, its annual after tax cash flow over the next seven years will be only \$325,000. If it does invest in this venture it expects its after-tax cash flow to be minus \$10 million annually for the same period. How do you determine if this venture is a good deal when the discount rate is 12 percent?

First, we need to find the net present value of the venture and company.

Year Venture ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer the request of the assignment in text file.

\$2.19