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Vacation Resorts is considering a new resort complex that will have an initial cost of $40 million. The resort complex will produce positive cash flows of $5 million per year in perpetuity. If the opportunity cost of capital is 14 percent per year, should Vacation Resorts build the new resort complex?

Vacation Resorts should build the new resort complex.

Vacation Resorts should not build the new resort complex.

Vacation Resorts should be indifferent between building and not building the new resort complex.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92877079

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