Question
The market capitalization of this company is $140 million, it's beta is 0.75, the risk free rate is 2% and the market risk premium is
The market capitalization of this company is $140 million, it's beta is 0.75, the risk free rate is 2% and the market risk premium is 6%. The company above is trying to decide on whether to start a project. The project costs $1 million and has expected cashflows of $75,000 a year forever.
a) What is the NPV of the project?
b) What is the payback period?
c) What is the IRR?
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Investments
Authors: William F. Sharpe, Gordon J. Alexander, Jeffery V. Bailey
6th Edition
8120321014, 978-8120321014
