Describe the equivalent tracking portfolio for project X, giving long and short positions and amounts, under a flat term structure of 8 percent, compounded annually. Conceptually, why are we interested in tracking project X’s cash flows with a portfolio of marketable securities?

Small Corp. is investigating a possible new project, project X, which would affect corporate cash flow as follows:AppendixLO1

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Cash Flows (in $) of Small Corp. without Project X in Year 0 1 2 3 4 5 150 175 185 185 195 200 Cash Flows (in $) of Small Corp. with Project X in Year 0 1 2 3 4 5 110 165 200 205 210 213