The Bitdollar Company wants to set up a cryptocurrency exchange business. According to the CFO Sally Smith,
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The Bitdollar Company wants to set up a cryptocurrency exchange business. According to the CFO Sally Smith, this business shows a lot of promise. She estimates that the business will generate free cash flow in year one of $101,500 (net), and the cash flows are estimated to grow 3% every year, forever. The business requires an upfront investment of $1,425,000.
a.If Sally requires a 12% return on its investment, should the crypto business be undertaken?
b.Sally is unsure about the 3% growth rate in its cash flows. At what growth constant rate would the company just break even if it required a 12% return on investment?
Related Book For
Essentials Of Business Statistics
ISBN: 9780078020537
5th Edition
Authors: Bruce Bowerman, Richard Connell, Emily Murphree, Burdeane Or
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