Question 2

You are a financial manager at Cisco and are trying to assess the following project. The project will require a $70 million initial investment and will generate free cash flows in years 1-5 as shown in the table below. Cisco maintains a constant debt-to-enterprise value ratio of 45% and its current WACC is 10.3%. Assuming that Cisco takes the project, by how much will Cisco's enterprise value increase as a result of taking the project? (Select one)

		$103.63 million
		$33.63 million
		$46.63 million
		$75 million

Free Cash Flows for New Project (in $ million) Year O 1 2 3 4 5 FCF (in $ millions) (70.00) 5.00 20.00 50.00 40.00 30.00