Question
In: Finance
Lamar Advertising is considering investing in a project that requires an after-tax initial investment of $128...
Lamar Advertising is considering investing in a project that requires an after-tax initial investment of $128 million and is expected to produce after-tax cash inflows of $29 million in advertising revenue for each of the next five years. The firm's cost of capital is 11%. Based on this information, the NPV of the project is _________ million and the firm should _________ the project
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$12.2; accept |
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-$12.2; reject |
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$20.8; accept |
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-$20.8; reject |
Solutions
Expert Solution
Solution :
The NPV of the project is - $ 20.8 Million.
Since the NPV is negative, the firm should reject the project.
Thus the solution is Option 4 i.e., - $ 20.8 ; reject
Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.
jeff jeffy answered 8 months agoRelated Solutions
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