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4. Oppel Company of the US is contemplating a new project investment in Argentina. The initial cost of the project is $100,000. The project is expected to generate net cash flows of $60,000 and $80,000 at the ends of year 1 and year 2 respectively. These cash flows are what Oppel can collect net bypassing Argentinian repatriation restrictions. It is also net of all taxes. a) If the appropriate discount rate is 16%, is the project acceptable? Calculate NPV b) Assume there is a 10% chance that the Argentine government may intervene in the projects operations anytime. If that happens, Oppel has no choice but to close the project and leave with no compensation. Recalculate the NPV with this assumptico and state if the project is worth it.

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