Consider a project that costs $1 million today but yields no returns for several year. Once the
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Question:
Consider a project that costs $1 million today but yields no returns for several year. Once the project becomes productive, it yields $250,000 annually forever. Suppose tow firms are examining this project, a Japanese firm with a cost of capital of 7% and a U.S. firm would the Japanese firm be willing to wait until the project starts generating cash?
a. 14 years
b. 5 years
c. 24 years
d. 3 years
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