Epsilon Corp. is evaluating an expansion of its business. The cash-flow forecasts for the project are as follows:

I understand that calculating the Required Rate of Return comes first, but I'm having difficulty understanding how to calculate the NPV.

The required rate of return = 15.2%

The firms existing assets have a beta of 1.4. The risk-free interest rate is 4% and the expected return on the market portfolio is 12%. What is the projects NPV?

Question 2 Epsilon Corp. is evaluating an expansion of its business. The cash-flow forecasts for the project are as follows: Years Cash Flow -100 1-10 +15 The firm's existing assets have a beta of 1.4. The risk- free interest rate is 4% and the expected return on the market portfolio is 12%. What is the project's NPV? Birkbeck 3 IT UNIVERSITY OF LONDON