You are a financial manager at Cisco and are trying to assess the following project. The project will require a $70 million initial investment and will generate free cash flows in years 1-5 as shown in the table below. Cisco maintains a constant debt-to-enterprise value ratio of 25% and its current WACC is 9.8%. Assuming that Cisco takes the project, by how much will Cisco's enterprise value increase as a result of taking the project? (Select one)

A.
$105.23 million

B.
$35.23 million

C.
$26.31 million

D.
$75 million

Free Cash Flows for New Project (in $ million) Year 0 1 2 3 FCF (in $ millions) (70.00) 5.00 20.00 50.00 40.00 4 30.00

Question

You are a financial manager at Cisco and are trying to assess the following project. The project will require a $70 million initial investment and will generate free cash flows in years 1-5 as shown in the table below. Cisco maintains a constant debt-to-enterprise value ratio of 25% and its current WACC is 9.8%. Assuming that Cisco takes the project, by how much will Cisco's enterprise value increase as a result of taking the project? (Select one)

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