hi please answer as many as possible Dr. AB develops a new super mask. SBW Ventures values new ventures using a 40% rateof return. The expected cash flows for the super mask project by year are:Year12345CF-50-20100400600Answer the following.a) Assume the Year 6 cash flows are $600 and is expected to be $600 in perpetuity.What valued does SBW assign to Dr. AB's super mask?b) Assume the year 6 cash flows are $800 then grows at 8% per year in perpetuity. Whatvalue does SBW assign to Dr. AB's super mask?c) The assumptions in part b hold; however, SBW Venture discounts cash flowsbeginning at year 6 at 20% rate of return. What valued does SBW assign to Dr. AB'ssuper mask? (hint: The ROR is still 40% for cash flows from years 1 through 5.)d) The assumptions in part c hold (i.e. assume $800 t-6 cash flows, an 8% growth ratein perpetuity from year 6, and 20% rate of return in perpetuity.) Graham Henryinvests $750 in the super mask project. If SBW, Inc has funded the mask project (i.e.Graham's investment is not required to meet the CF forecast). What is Graham'sownership percentage?

The value of SBW Ventures will be the sum of present values of all future cash flows. The cash flows…

Answered: a) Assume the Year 6 cash flows are…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 21P

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