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Epsilon Corp. is evaluating an expansion of its business. The cash-flow forecasts for the project are as follows: Years 0 1-B Cash Flow ($ millions)

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Epsilon Corp. is evaluating an expansion of its business. The cash-flow forecasts for the project are as follows: Years 0 1-B Cash Flow ($ millions) -215 The firm's existing assets have a beta of 1.7. The risk-free interest rate is 3% and the expected return on the market portfolio is 11%. What is the project's NPV? (Enter your answer in millions. A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) NPV million 5 5 7 B Economic State Fast growth Slow growth Recession Depression Probability 0.33 0.42 0.15 Return 56% 15% -12% -42% 0 1 2 0.10 3 Compute the expected return and standard deviation. (Do not round intermediate calculations and round your answers to 2 decimal places.) 5 Expected return Standard Deviation 7 8 9 00 21 2

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