Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Retu A project has a forecasted cash flow of $130 in year 1 and 5441 in year 2. The interest rate is 5%, the estimated

image text in transcribed
image text in transcribed
Retu A project has a forecasted cash flow of $130 in year 1 and 5441 in year 2. The interest rate is 5%, the estimated risk premium on the market is 125%, and the project has a beta of 0 20. f you use a constant risk-adjusted discount rate, antwer the following .. What is the PV of the project (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. 15 225 26 Procent value B. What is the certainty equivalent cash flow in year 1 and year 27 (Do not round intermediate calculations, Round your answers to 2 decimal places) Answer is complete but not entirely correct. Curtainty Equivalent Cash Flow Year 1 $ 11054 Year 2 5 129.55 Active Windows c. What is the ratio of the certainty-equivalent cash flows to the expected cash flows in years 1 and 22 (Do not round intermediate calculations. Round your answers to 2 decimal places.) Answer is complete but not entirely correct. Ratio Year 1 0.90 0.92 Year 2

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Modern Project Finance A Casebook

Authors: Benjamin C. Esty

1st Edition

0471434256, 978-0471434252

More Books

Students also viewed these Finance questions

Question

Describe Descartess views about reflex activity.

Answered: 1 week ago