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

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 two years: End of year FCF $4,990 $5,954 The project has been partly financed by bank debt of $4,000 which is to be fully repaid over the life of the project in accordance with the following schedule: 1 End of year Principal Repayment $2,000 $2.000 The cost of equity is 10% per annum, the interest rate on the debt is 5% per annum and the corporate tax rate is 30%. Use the FCFE model to calculate the current value of equity in the project

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