A firm produces a perpetual stream of free cash flows at $10 million per quarter. What is the value of this contract? The quarterly required return is 2.5%.

What is the NPV of a project that costs $500 to start and returns free cash flows of $50 for 4 years and then $100 forever. The discount rate is 10%.

Answer rating: 100% (QA)

For the first question we can use the perpetuity formula to find the value of the contract ... View the full answer