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Calculate npv that generates a perpetual cash flow forever

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Reference no: EM132028146

A firm is considering an investment project. The cost of the project today is $100. The project will generate perpetual cash flow of $10 every year forever. Given the risk of the project, the proper discount rate is 12%. Which of the following statements is NOT true?

a. The project has an IRR of 10%

b. The project as a positive NPV

c. The project is located below SML

How do you calculate NPV that generates a perpetual cash flow forever?

Reference no: EM132028146

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