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You are a consultant to a large manufacturing corporation that is considering a project with the...

You are a consultant to a large manufacturing corporation that is considering a project with the following net after-tax cash flows (in millions of dollars):

Years from Now After-Tax Cash Flow
0 –90
1–10 17

The project's beta is 1.2.

a. Assuming that rf = 4% and E(RM) = 11%, what is the net present value of the project? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

b. What is the highest possible beta estimate for the project before its NPV becomes negative? (Round your answer to 2 decimal places.)

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Expert Solution


jeff jeffy answered 1 year ago
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