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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

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 Cash Flow
0 110
110 +10

a.

On the basis of the behavior of the firms stock, you believe that the beta of the firm is 1.2. Assuming that the rate of return available on risk-free investments is 3% and that the expected rate of return on the market portfolio is 10%, what is the net present value of the project?(Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.)

NPV $

b. Should the project be accepted?
No

Yes

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