You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years Cash Flow 100 1-10 15 On the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.34. Assuming that the rate of return available on risk-free investments is 5% and that the expected rate of return on the market portfolio is 14%, what is the net present value of the project? (Negative amount should be indicated by a minus sign. Do not round Intermediate calculations. Enter your answer in
You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years Cash Flow 100 1-10 15 On the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.34. Assuming that the rate of return available on risk-free investments is 5% and that the expected rate of return on the market portfolio is 14%, what is the net present value of the project? (Negative amount should be indicated by a minus sign. Do not round Intermediate calculations. Enter your answer in
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:You are a consultant to a firm evaluating an expanslon of Its current business. The cash-flow forecasts (in millions of dollars) for the
project are as follows:
Years
Cash Flow
100
+1
1-10
15
On the basis of the behavior of the firm's stock, you believe that the beta of the firm is 1.34. Assuming that the rate of return available
on risk-free investments is 5% and that the expected rate of return on the market portfolio is 14%, what is the net present value of the
project? (Negative amount should be indicated by a minus sign. Do not round Intermediate calculations. Enter your answer in
millions of dollars rounded to 2 decimal places.)
Net present value
million
10 of 10
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