A retail coffee company is planning to open 105 new coffee outlets that are expected to generate $13.8 million in free cash flows per year, with a growth rate of 3.3% in perpetuity. If the coffee company's WACC is 9.5%, what is the NPV of this expansion? The present value of the free cash flows is $ million. (Round to two decimal places.)

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 20EA: Towson Industries is considering an investment of $256,950 that is expected to generate returns of...
Question
A retail coffee company is planning to open 105 new coffee outlets that are expected to generate $13.8 million in free
cash flows per year, with a growth rate of 3.3% in perpetuity. If the coffee company's WACC is 9.5%, what is the NPV
of this expansion?
The present value of the free cash flows is $
million. (Round to two decimal places.)
Transcribed Image Text:A retail coffee company is planning to open 105 new coffee outlets that are expected to generate $13.8 million in free cash flows per year, with a growth rate of 3.3% in perpetuity. If the coffee company's WACC is 9.5%, what is the NPV of this expansion? The present value of the free cash flows is $ million. (Round to two decimal places.)
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Entrepreneurial Finance
Entrepreneurial Finance
Finance
ISBN:
9781337635653
Author:
Leach
Publisher:
Cengage
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT