Question
You are a major grocery chain (Fine Foods R Us) and are now contemplating starting a food truck supply service. You will prepare (pre-cook and
You are a major grocery chain (Fine Foods R Us) and are now contemplating starting a food truck supply service. You will prepare (pre-cook and then freeze or chill) 'small plates' like Tapas, which will then be sold to owners of food trucks. The start-up cost is $250 million. Your financial analysts calculate that the operation will produce free cash flow (FCFF) of $6 million the 1st year, and that this free cash flow will grow by 11% over the following 25 years (i.e., g=11% for t=2 through t=26). After that, free cash flow is expected to grow at a constant rate of 4% forever. Your WACC for this project is 8%. What is the project's NPV? (Round your answer to three decimal places)
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