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 | -$21 |
| 1 to 10 | $10 |
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.)
NPV?
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.)
Highest Possible Beta Value?
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Finance For Freelancers Financial Intelligence
Authors: Andrew Holmes
1st Edition
1408101165, 978-1408101162
