Question
Suppose Microsoft Co. is considering introducing a new product called the Weight-less Tablet. The risk of the project is judged to be similar to the
Suppose Microsoft Co. is considering introducing a new product called the Weight-less Tablet.
The risk of the project is judged to be similar to the risk of the company.
The cost today of bringing the new tablet to market is $200 million, but Microsoft expects first-year incremental free cash flows from this investment to be $100 million and to grow at 3% per year thereafter. If Microsofts WACC is 5.7%, should it go ahead with the project?
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Earnings Quality
Authors: Andrew P.C.
1st Edition
1521507724, 978-1521507728
