Question: [Question (1)-(8) are sharing the same information] H-E-B is considering opening a new store in Fort Worth: This project is in the same line of
[Question (1)-(8) are sharing the same information] H-E-B is considering opening a new store in Fort Worth: This project is in the same line of business as HEB 's existing projects. Today, the project requires $160M as an initial investment. For each year, this store will generate (i) $100M with a 20% chance, (ii) $60M with a 50% chance, and (iii) $20M with a 30% chance. The cash flow stream from this store will start next year and last forever. (a) What is the expected cash flow from this project each year? (2 points) (b) What is the NPV of this project? (5 points) (c) Should HEB accept this project? (2 points) Make sure you explictly answer (a), (b), and (c)
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