What will be the change in the value of the company, Accounting Basics

What will be the change in the value of the company

Problem

An auto-parts company is deciding whether to sponsor a racing team for a cost of $1000000. The sponsorship would last for 6 years and is expected to increase cash flows by $300000 per year. If the discount rate is 7%, what will be the change in the value of the company if it chooses to go ahead with the sponsorship?

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Accounting Basics: What will be the change in the value of the company

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