You are a consultant to a firm evaluating an expansion of its current business. The cash-flow...
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You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years Cash Flow 100 1-10 + 16 - On the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.33. Assuming that the rate of return available on risk-free investments is 6% and that the expected rate of return on the market portfolio is 15%, what is the net present value of the project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 2 decimal places.) > Answer is complete but not entirely correct. $ (42.67) million Net present value You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years Cash Flow 100 1-10 + 16 - On the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.33. Assuming that the rate of return available on risk-free investments is 6% and that the expected rate of return on the market portfolio is 15%, what is the net present value of the project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 2 decimal places.) > Answer is complete but not entirely correct. $ (42.67) million Net present value
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Answer rating: 100% (QA)
To calculate the net present value NPV of the project we need to discount the cash flows to their pr... View the full answer
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
Posted Date:
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