Consider a new business line that your company will start: Costs to launch the project: $6,000,000 Life of the project: 5 years Cash inflows from the project: Year One $ 400,000 Year Two $1,700,000 Year Three $2,650,000 Year Four $3,400,000 Year Five $ 950,000 Project Beta 0.83 Risk-Free Rate 1.20% Market Risk Premium 5.55% Default Risk Premium for company’s bonds 1.45% Maturity Risk Premium for company’s bonds 1.15% What is the NPV of the Project (rounded to the nearest dollar)?
Consider a new business line that your company will start:
Costs to launch the project: $6,000,000
Life of the project: 5 years
Year One $ 400,000
Year Two $1,700,000
Year Three $2,650,000
Year Four $3,400,000
Year Five $ 950,000
Project Beta 0.83
Risk-Free Rate 1.20%
Market Risk Premium 5.55%
Default Risk Premium for company’s bonds 1.45%
Maturity Risk Premium for company’s bonds 1.15%
What is the NPV of the Project (rounded to the nearest dollar)?
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