Suppose CatGH Ltd. wants to expand its business, and the financial analyst predicts the cash-flow from the expansion would be -$200 million in year 0 and $65 million from years 1 to 5. If the systematic risk of the firm is given as 0.45 and the risk-free rate is 5% and the market risk premium is 20%. Assuming the project as the same required rate of return as the firm, should the firm proceed with the expansion project? Explain Why.

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To determine whether CatGH Ltd should proceed with the expansion project we need to calculate the ne... View the full answer