BUS-F 370 Lecture Notes - Lecture 9: Regression Analysis, Net Present Value, Apple Iic
Document Summary
A manager of overton corporation is considering a corporate project that will require a cash outflow at timepoint zero of ,000,000; the manager estimates that the operations will generate cash inflows for six years and then cease to exist. Overton currently has the following three product areas: irons (30% of total volume); drivers (50%) and putters (20%). A regression analysis of the returns of the three areas with the returns of the s & p 500 index provides the following graphs: The manager estimates that this new project most closely resembles the risk profile of the. Current estimates for the risk-free rate and the equity premium are 2. 2% and. [hint: what is the weighted average of the existing project betas?: 0. 97, 1. 20, 1. 04, 0. 28, a chief financial officer is reviewing the following timeline for a project investment: The cfo has calculated that the project cost of capital (according to the firm"s capm) is.
