. A manufacturing company based in a developing country is considering the possibility of opening a new plant. The investment required to build the factory and buy the equipment is $5 million. The...

. A manufacturing company based in a developing country is considering the possibility of opening a new plant. The investment required to build the factory and buy the equipment is $5 million. The firm estimates that the operating activities conducted in the new plant will generate a profit of $100,000 in each of the next four years. At 1 the end of the fourth year, the plant will be sold to a multinational company for $7.5 million. The project is estimated to have the same level of risk as an investment in the local stock market, which offers an expected annual rate of return of 15%. Would you advise the company to undertake the project? Explain.