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 | -26 |
| 1-9 | 24 |
| 10 | 15 |
The project beta is 1.65. Assuming Rf = 4%, and E(Rm) = 14%, what are the discount rate and the NPV of the project?.
Options:
|
| Discount Rate = 18.5%, NPV = $85.25 |
|
| Discount Rate = 20.5%, NPV = $71.54 |
|
| Discount Rate = 12.4%, NPV = $76.95 |
|
| Discount Rate = 20.8%, NPV = $85.95 |
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Modern Financial Markets Prices, Yields, And Risk Analysis
Authors: Mark Griffiths, Drew Winters, David W Blackwell
1st Edition
0470000104, 9780470000106
