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As a completely separate consideration, suppose you have estimated the cash flows below for a small product line that is unrelated to your current lines
As a completely separate consideration, suppose you have estimated the cash flows below for a small product line that is unrelated to your current lines of operation. You have also identified the additional data below for two firms that compete in the product line under consideration. Assume you've determined your firm's Dividend Discount Model data to be irrelevant to this analysis Question 4.1: (7 points) Should you undertake this new product line? Substantiate your answer using NPV YearEstimated Cash Flow PB Compan $(580,000) $73,549 $118,650 $127,500 $133,420 $140,790 $148,635 0.75 1.92 34% 0 D/E Beta Tax Rate 2 4 J Compan D/E Beta Tax Rate 0.35 1.48 36% As a completely separate consideration, suppose you have estimated the cash flows below for a small product line that is unrelated to your current lines of operation. You have also identified the additional data below for two firms that compete in the product line under consideration. Assume you've determined your firm's Dividend Discount Model data to be irrelevant to this analysis Question 4.1: (7 points) Should you undertake this new product line? Substantiate your answer using NPV YearEstimated Cash Flow PB Compan $(580,000) $73,549 $118,650 $127,500 $133,420 $140,790 $148,635 0.75 1.92 34% 0 D/E Beta Tax Rate 2 4 J Compan D/E Beta Tax Rate 0.35 1.48 36%
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