Question: Consider a project which is expected to generate the following stream of unlevered free cash flow over the next three years: End of year FCFU

Consider a project which is expected to generate the following stream

Consider a project which is expected to generate the following stream of unlevered free cash flow over the next three years: End of year FCFU $1,000 $1,000 $991 The cost of equity is 15% per annum, the cost of debt is 5% per annum, the corporate tax rate is 40% and the target leverage ratio is 50%. All dollar amounts are in millions. A colleague has valued the firm today at $2,480 million using the standard WACC model and asks you to check her result. What should you tell her

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