Question
You are a consultant to a firm evaluating an expansion of its current business. The annual cash flow forecasts (in millions of dollars) for the
You are a consultant to a firm evaluating an expansion of its current business. The annual cash flow forecasts (in millions of dollars) for the project are:
Years | Annual Cash Flow |
0 | -100 |
1 - 10 | 19 |
Based on the behaviour 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 3% and that the expected rate of return on the market portfolio is 12%, what is the net present value of the project? (Enter your answers in millions. Round your answer to 2 decimal places. Use minus sign to enter negative answers, if any.)
NPV $ million |
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