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 | 29 |
| 19 | 15 |
| 10 | 30 |
| The project's beta is 1.8. Assumingrf= 6% andE(rM) = 16%. |
| 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.) |
| Net present value | million |
| 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 2 decimal places.) |
| Highest possible beta value |
|
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Principles Of Finance
Authors: Besley, Scott Besley, Eugene F Brigham, Brigham
4th Edition
0324655886, 9780324655889
