Your factory has been offered a contract to produce a part for a new printer....
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Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $5.02 million per year. Your upfront setup costs to be ready to produce the part would be $8.03 million. Your discount rate for this contract is 7.7% . a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in the value of your firm?
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