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
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 0 1-10 Cash Flow -210 +35 a. On the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.5. Assuming that the rate of return available on risk-free investments is 7% and that the expected rate of return on the market portfolio is 15%, 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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Get StartedRecommended Textbook for
Fundamentals of Corporate Finance
Authors: Richard Brealey, Stewart Myers, Alan Marcus
8th edition
77861620, 978-0077861629
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