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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 | 37 |
19 | 12 |
10 | 24 |
The project's beta is 1.6. Assuming rf = 5% and E(rM) = 15%. |
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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