Question
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 | 100 |
1-10 | +14 |
On the basis of the behavior of the firms stock, you believe that the beta of the firm is 1.48. Assuming that the rate of return available on risk-free investments is 6% 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.
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