Question
A firm is considering investing in a new project with an upfront cost of $20 million. The project will generate an incremental free cash flow
A firm is considering investing in a new project with an upfront cost of $20 million. The project will generate an incremental free cash flow of $10 million in the first year and this cash flow is expected to grow at an annual rate of 7% forever. The firm's WACC is 11%. The project has similar risk to the firm. What is the value of this project in millions?
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International Finance Theory and Policy
Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz
10th edition
978-0133425895, 133425894, 978-0133423631, 133423638, 978-0133423648
