Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project
You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years 1-10 Cash Flow -100 +19 On the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.37. Assuming that the rate of return available on risk-free investments is 4% and that the expected rate of return on the market portfolio is 16%, what is the net present value of the project? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 2 decimal places. Answer is complete but not entirely correct. Net present value $ 27.50 million
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started