You are trying to value the following project for your company. You know that the project will generate free cash flows in perpetuity that will grow at a constant annual rate of 1% after year 4. The applicable interest rate for this project is 7%. What is the NPV of this project? Express your result in S-millions and round to two decimals (do not include the S-symbol in your answer). If you calculate a negative NPV enter a negative number.

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
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You are trying to value the following project for your company. You know that the project will generate free cash flows in perpetuity that will grow at a constant annual rate of 1% after year 4. The applicable interest rate for this project is 7%. What is the
NPV of this project? Express your result S-millions and round to two decimals (do not include the $-symbol in your answer). If you calculate a negative NPV enter a negative number.
Free Cash Flow Forecasts (in $-millions)
Free Cash Flows
0
-54
1
12
Year
2
15
3
19
4
20
Transcribed Image Text:You are trying to value the following project for your company. You know that the project will generate free cash flows in perpetuity that will grow at a constant annual rate of 1% after year 4. The applicable interest rate for this project is 7%. What is the NPV of this project? Express your result S-millions and round to two decimals (do not include the $-symbol in your answer). If you calculate a negative NPV enter a negative number. Free Cash Flow Forecasts (in $-millions) Free Cash Flows 0 -54 1 12 Year 2 15 3 19 4 20
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