Question
Question 20 [5 pts] Consider a project that requires an investment cost of $10 million today. The project is expected to generate a cash flow
Question 20 [5 pts]
Consider a project that requires an investment cost of $10 million today. The project is expected to generate a cash flow $12 million in one year. Assume that a discount rate of 10% applies to all cash flows concerned with the firm.
- Suppose the firm has $10 million in hand. How much is the project worth, net of the cost, in terms of the present value today? Provide the answer in $ million, rounded to 4 decimal places.
Answer:
- Suppose the firm has no cash in hand. The firm instead can issue a financial claim priced $10 million today that promises to pay investors $11 million in one year. How much is the project worth, net of the cost, in terms of the present value today (in $ million, in 4 decimal places)?
Answer:
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Finance For Development
Authors: Barbara Stallings
1st Edition
0815780850, 978-0815780854
