Question #32 is the one needed to be answered. Question #31 is included due to question #32 asking for refelction back on question #31. Thank you ! sorry for the bother. 31. CAPM and Valuation. You are a consultant to a firm evaluating an expansion of its currentbusiness. The cash-flow forecasts (in millions of dollars) for the project are as follows:Years01-10Cash Flow-100+15On the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.4.Assuming that the rate of return available on risk-free investments is 4% and that the expectedrate of return on the market portfolio is 12%, what is the net present value of the project?(LO12-3)32. CAPM and Cost of Capital. Reconsider the project in Problem 31. (LO12-3)a. What is the project IRR?b. What is the cost of capital for the project?c. Does the accept-reject decision using IRR agree with the decision using NPV?

Risk free rate = 4%Expected market return = 12%Beta = 1.40Year 0 CF = -$100Year 1 to 10 CF = $15

(LO12-3) 32. CAPM and Cost of Capital. Reconsider the project in Problem 31. (LO12-3) a. What is the project IRR? b. What is the cost of capital for the project? c. Does the accept-reject decision using IRR agree with the decision using NPV?

(LO12-3) 32. CAPM and Cost of Capital. Reconsider the project in Problem 31. (LO12-3) a. What is the project IRR? b. What is the cost of capital for the project? c. Does the accept-reject decision using IRR agree with the decision using NPV?

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 25SP: Start with the partial model in the file Ch07 P25 Build a Model.xlsx on the textbook’s Web site....

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