You are evaluating an expansion of your current business. The annual cash flow forecast (in millions of

Question:

You are evaluating an expansion of your current business. The annual cash flow forecast (in millions of dollars) for the project is as follows:
Years.............................Annual Cash Flow
0..................................-10
1-10..............................+15
According to your analysis, the beta of the firm is expected to be 1.4. Currently T-bill rate is 4% and the on the market is 12%. Willthe project generate sufficient cash flows to meet the required return? If your answer is no, at what cost of the project will you accept it? Please explain your answers.
Expected Return
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