Question: A project is expected to generate cash flow from assets equal to $250,000 at the end of the year. The cash flows are expected to

A project is expected to generate cash flow from assets equal to $250,000 at the end of the year. The cash flows are expected to grow at 4% for the next 20 years. At the end of the 20 years, the project will no longer be viable, but the company will be able to sell off related equipment at an after tax salvage value of $1,000,000. The cost of capital for this project is 8%.

The company is considering selling off this project. If the debt associated with this project is $2,000,000, what is the equity value of the project?

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