Page 3 Question 3 [15 marks] Company XYZ has the following market value balance sheet: Assets $75M PV(Operating Assets) $20M Excess Cash Liabilities $35M Debt $60M Equity The expected return on equity = rE = 20%. The debt is risk free and has expected return rD = 5% = risk free rate. The excess cash also yields the risk-free rate. The company is faced with a new investment opportunity that has the same systematic risk as the operating assets of the company. It will require an investment of $9M today and will give an expected cash flow of $10M one year from now and nothing after that. What is the Net Present Value (NPV) of the new project