Question
You are a consultant to a large manufacturing corporation considering a project with the following net after-tax cash flows (in millions of dollars): Years from
You are a consultant to a large manufacturing corporation considering a project with the following net after-tax cash flows (in millions of dollars):
| Years from Now | After-Tax CF |
|---|---|
| 0 | $ 36 |
| 1 to 10 | $ 12 |
The project's beta is 1.5. Assuming rf = 4% and E(rM) = 12%
Required:
a. What is the net present value of the project? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
b. What is the highest possible beta estimate for the project before its NPV becomes negative? (Do not round intermediate calculations. Round your answer to 3 decimal places.)
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Handbook Of Consumer Finance Research
Authors: Jing J. Xiao
1st Edition
1441926046, 978-1441926043
