Question
You are a consultant to a large manufacturing corporation that is considering a project with the following net after-tax cash flows (in millions of dollars):
You are a consultant to a large manufacturing corporation that is considering a project with the following net after-tax cash flows (in millions of dollars):
Years from Now After-Tax Cash Flow
0 -30
1-10 14
The project's beta is 1.6.
a. Assuming that rf = 4% and E(rM) = 18%, 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? (Round your answer to 2 decimal places.)
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