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4. Fountain Corporation has the option to invest in Project Horizon. The project requires an initial investment of $100,000, which can only be raised through new equity. The project will generate $150,000 of cash flows in one year. There are no taxes. Fountains cost of capital is 10%. (i) Should Fountain invest in Project Horizon if its objective is to maximize firm value? (i) If the firm has to pay debt holders $80,000 in one year and the payment can only come from the payoff of the project mentioned above, would shareholders want to fund this project? Provide an analysis to substantiate your answer.
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