Question: A project costs $2.5 million up front and will generate cash flows in perpetuity of $240,000. The firms cost of capital is 9%. a. Calculate

A project costs $2.5 million up front and will generate cash flows in perpetuity of $240,000. The firm’s cost of capital is 9%.

a. Calculate the project’s NPV.

b. Calculate the annual EVA in a typical year.

c. Calculate the overall project EVA and compare to your answer in part a.


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