Question: Level 1, Blue Bell Industries; Just the basic stuff Monday morning at Blue Bell Industries. After poured yourself a cup of coffee and had a

Level 1, Blue Bell Industries; Just the basic stuff
Monday morning at Blue Bell Industries.
After poured yourself a cup of coffee and had a chat with your peers in the executive lounge
you arrived at your office. On the desk you found a handwritten note from your CEO with a
simple comment: "To be presented at todays meeting at 10:30AM".
The case is rather straightforward as a simple guideline is needed ahead of entering into
the business area of container handling at ports. The CEO notes that he assumes that
a risk premium needs to be considered at +5% for low level of risk, +7% at medium and
+9% at high level of risk. The time horizon to be considered would be 10 years.
You are already aware that the initial investment would be GBP 200m and the expected
cash flow is expected at 36m annually. The risk free rate is set at 5%
Present what you will bring with you to the meeting and provide detailed calculations.
You also consider to inform your peer at the meeting about what advantages there
are using sensitivity analysis. What would that be?

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