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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%.
-What is the NPV of this project if the film maker invests his own money and does not issue the new security? What is the NPV if the film maker issues the new security?
Defence Mechanisms
Unconscious psychological strategies used by individuals to cope with reality and maintain self-image by reducing anxiety arising from unacceptable thoughts or feelings.
Freudian Theory
A psychological theory developed by Sigmund Freud that emphasizes unconscious processes and childhood experiences in shaping personality and behavior.
Denial of Reality
A psychological defense mechanism in which confrontation with a personal problem or with reality is avoided by denying the existence of the problem or reality.
Self-conscious
Experiencing acute awareness of oneself, particularly in social contexts, that can lead to feelings of awkwardness or anxiety.
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