Consider a project that costs S$15,000 today and generates net free cash flows of S$5,000, S$10,000, S$4,000,
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Consider a project that costs S$15,000 today and generates net free cash flows of S$5,000, S$10,000, S$4,000, S$ over the next 3 years (starting next year). The company's cost of capital is 11.5% and its management usually wants to recover its investment within 2 years. It is anticipated that after 3 years, the project would be discontinued. The investment would then be fully written off and discarded worthlessly. Perform the appropriate calculation and mark the result to assess whether the investment creates shareholder value and therefore should be released.
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0133400694
1st canadian edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford, David A. Stangeland, Andras Marosi
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