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Suppose MMM has a project opportunity. The project has an initial cost of $10 million. The projects expected cashflows are $1 million the first year,
Suppose MMM has a project opportunity. The project has an initial cost of $10 million. The projects expected cashflows are $1 million the first year, $2 million the second year, and will increase by 0.013 per year thereafter. MMM has an equity cost of capital of 0.071, a debt cost of capital of 0.058, a capital structure of 40% equity and 60% debt, and has a tax rate of 0.31. What is the NPV of this project (in millions)? Previous answer to this question did not have work shown that made sense and had no final
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