Question

Year 0 1 2 3 Free Cash Flows ($ millions) ($200) $100 $80 $60 The market value balance sheet and information regarding Mercurtainment's cost of capital are also available. Liabilities Assets Cost of ($ millions) ($ millions) Capital Cash 200 Debt 250 Debt 4% Other Assets 800 Equity 750 Equity 9.9% Tax rate (T) 20% Suppose that Mercurtainment plans to borrow $121 million to fund this new project. If the principal of $121 million will be paid in three equal installments at the end of each year (Year 1, Year 2, and Year 3). The NPV of this new project is closest to