As a CEO of a private firm, you are considering a government contract that will generate...

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As a CEO of a private firm, you are considering a government contract that will generate a constant and risk-free cash flow of $100 million each year for the firm over the next four years. In order to determine the price of the project, you have collected the Treasury bond price information as follows: The prices of Treasury zero coupon bonds with $1000 face value and different maturities are: $980 for 1-year maturity, $920 for 2-year maturity, $850 for 3-year maturity, and $750 for 4-year maturity. Given the information above, what should be the price of the project? As a CEO of a private firm, you are considering a government contract that will generate a constant and risk-free cash flow of $100 million each year for the firm over the next four years. In order to determine the price of the project, you have collected the Treasury bond price information as follows: The prices of Treasury zero coupon bonds with $1000 face value and different maturities are: $980 for 1-year maturity, $920 for 2-year maturity, $850 for 3-year maturity, and $750 for 4-year maturity. Given the information above, what should be the price of the project?

Answer rating: 100% (QA)

To determine the price of the project we need to calculate the present value of the cash flows it ge... View the full answer