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 | -270 |
1-10 | +65 |
On the basis of the behavior of the firms stock, you believe that the beta of the firm is 1.4. 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? Yes or No
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