north corporation
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Based on the above analysis, since it has a positive NPV, it should be accepted.
But other aspects should be considered before accepting this project.
(1)limitations of the above calculation
---CAPM
*It assumes well-diversified investors pay attention only to the systematic risk of each security. But in real world, unsystematic risk cannot be completely diversified away.
*the result is sensitive to the estimates of beta, market risk premium and risk-free rate. But these estimates can also be based on different assumptions.
----NPV
*different estimates of cash flows can have different NPVs
*different discount rates used can have different NPVs
(2)Other financial information and non-financial information
---sensitivity analysis and breakeven analysis
---payback information
---strategic value of the project
---legal and social effects of this project etc.