A firm is looking to invest in a new sports drink

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Reference no: EM13803377

A firm is looking to invest in a new sports drink. They must invest $4 million today and another $4 million in one year. They expect that in two years, they will receive $3 million in free cash flow, and this will continue for 5 years (so the final $3 million arrives in exactly 6 years). The beta of this project is 1.8. If the expected return on the S&P500 Index is 9% and the risk-free rate is 2%, what is the NPV of this project ($ million)?

Reference no: EM13803377

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