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An independent film maker is considering producing a new movie. The initial cost for making this movie will be $20 million today. Once the movie is completed, in one year, the movie will be sold to a major studio for $25 million. Rather than paying for the $20 million investment entirely using its own cash, the film maker is considering raising additional funds by issuing a security that will pay investors $11 million in one year. Suppose the risk-free rate of interest is 10%.
-Without issuing the new security,the npv for this project is closest to what amount? Should the film maker make the investment?
Onychia
An inflammation of the nail bed resulting in pain, swelling, and sometimes loss of the nail.
Nail Bed
The skin beneath the nail plate that provides nourishment and support for nail growth.
Inflammation
A biological response of body tissues to harmful stimuli, such as pathogens, damaged cells, or irritants, characterized by redness, warmth, swelling, and pain.
Pruritus
The medical term for itchiness, a sensation that leads to the desire to scratch.
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