You are a consultant to a large manufacturing corporation considering a project with the following net after-tax cash flows (in millions of dollars): Years from Now 0 1 to 10 After-Tax CF -$ 21 $ 10 The project's beta is 1.5. Assuming rf = 4% and E(rm) = 12% Required: a. What is the net present value of the project? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Answer is complete and correct. Net present value $ 27.33 million b. What is the highest possible beta estimate for the project before its NPV becomes negative? (Do not round intermediate calculations. Round your answer to 3 decimal places.) Answer is complete but not entirely correct. Highest possible beta value (0.374)

You are a consultant to a large manufacturing corporation considering a project with the following net after-tax cash flows (in millions of dollars): Years from Now 0 1 to 10 After-Tax CF -$ 21 $ 10 The project's beta is 1.5. Assuming rf = 4% and E(rm) = 12% Required: a. What is the net present value of the project? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Answer is complete and correct. Net present value $ 27.33 million b. What is the highest possible beta estimate for the project before its NPV becomes negative? (Do not round intermediate calculations. Round your answer to 3 decimal places.) Answer is complete but not entirely correct. Highest possible beta value (0.374)

Name: am. 111. You are a consultant to a large manufacturing corporation con
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Description: am. 111. You are a consultant to a large manufacturing corporation considering a project with the following net after-tax cash flows (in millionsof dollars):Years from Now01 to 10After-Tax CF-$ 21$ 10The project's beta is 1.5. Assuming rf 4% and E(rm

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 3CMA

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