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MM Inc. is an all-equity firm (the firm value equals the value of equity). As the...

MM Inc. is an all-equity firm (the firm value equals the value of equity). As the CEO of MM Inc., you are considering purchasing a private jet for the firm. The private jet costs $12 million today and will save $2 million (in today’s value) on travel expenses for the firm over its life. You own 1% of MM's equity ownership. The private benefits of the private jet to you are estimated to be $800,000 in today’s value.

Suppose you a self-interested CEO. From your own perspective, what is the NPV of purchasing a private jet?

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ekkarill92 answered 2 years ago
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