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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 | -100 |
1-10 | 18 |
The project's beta is 1.12. Assuming that the riks-free rate is 5% and the market expected return is 9.8% what is the net present value of the project? What is the highest possible beta estimate for the project before its NPV becomes negative?
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