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28 Sep 2019
You are a consultant to a large manufacturing corporation considering a project with the following net after-tax cash flows (in millions of dollars)
Years from Now After-Tax CF 0 -26 1â9 16 10 26
The project's beta is 3.8. Assume rf = 10% and E (rM ) = 17%.
Required: (a) What is the net present value of the project? (Enter your answer in millions. Round your answer to 2 decimal places.)
Net present value million
(b) What is the highest possible beta estimate for the project before its NPV becomes negative? (Round your answer to 3 decimal places.)
Highest possible beta estimate
You are a consultant to a large manufacturing corporation considering a project with the following net after-tax cash flows (in millions of dollars)
Years from Now | After-Tax CF | ||
0 | -26 | ||
1â9 | 16 | ||
10 | 26 | ||
The project's beta is 3.8. Assume rf = 10% and E (rM ) = 17%. |
Required: | |
(a) | What is the net present value of the project? (Enter your answer in millions. Round your answer to 2 decimal places.) |
Net present value | million |
(b) | What is the highest possible beta estimate for the project before its NPV becomes negative? (Round your answer to 3 decimal places.) |
Highest possible beta estimate |
Deanna HettingerLv2
28 Sep 2019