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 After-Tax CF 0 −$ 22 1 to 10 $ 10 The project's beta is 1.6. Assuming rf = 5% and E(rM) = 15% 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.) 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.)
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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 | After-Tax CF |
|---|---|
| 0 | −$ 22 |
| 1 to 10 | $ 10 |
The project's beta is 1.6. Assuming rf = 5% and E(rM) = 15%
Required:
a. What is the
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.)
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