Question: Q1 (15 points) Hells is considering a project with free cash flows in one year of $75000 in a weak economy with 80% or $160000

Q1 (15 points) Hells is considering a project with free cash flows in one year of $75000 in a weak economy with 80% or $160000 in a strong economy with a 20% probability. The initial investment required for the project is $60000, and the project cost of capital is 10%. The risk-free interest rate is 4%. (Round to a whole number) Q1.1 What is the NPV of the project? (5 points) Q1.2 Suppose that to raise the funds for the initial incestment the finm borrows $60,000 at the riskfree rate. What will the cash flow that equity holders will receive in one year be in a weak economy and in a strong economy? (5 points) Q1.3 Suppose that to raise the funds for the initial investment the firm borrows $60,000 at the riskfree rate, then the cost of capital for the firm's levered equity is? Round to a whole number. (5 points)
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