Capm and valuation, Suppose you are a consultant to a

Capm and valuation

Assignment Help Finance Basics

Reference no: EM1361591

You are a consultant to a firm evaluating an expansion business. The cash-flow forecasts (in millions of dollars) for the project are:

Years Cash Flow
0 -100
1-10 + 15

Based on the behavior of the firm's stock, you believe that the beta of the firm is 1.4. Assuming that the rate of return available on risk-free investments is 4 percent and that the expected rate of return on the market portfolio is 12 percent, what is the net present value of the project?

What is the project IRR? What is the cost of capital for the project? Does the accept-reject decision using IRR agree with the decision using NPV?

Reference no: EM1361591

Questions Cloud

Illustrate what are the advantages and disadvantages : Illustrate what are the advantages and disadvantages of acquiring inputs through this means. Give example not used in the textbook that uses this method of processing.

What is the magnitude of the acceleration of the rock : Daisy throws a rock horizontally with a speed of 12 m/s from a bridge. It falls 2.28 s before reaching the water below. When the rock hits the water it is traveling with what horizontal component of the velocity.

Metebolic syndrome and role of diabetes : What is the metebolic syndrome and the role diabetes plays in that syndrome?

Illustrate what effect would suggestions have on production : Given economic conditions today, do you suggest expansionary fiscal policy or contractionary fiscal policy. Illustrate what effect would your suggestions have on production and employment.

Capm and valuation : Suppose you are a consultant to a company evaluating an expansion business. The cash-flow forecasts in millions of dollars for the project are:

Management and structural design : Do you think technology will eventually enable top managers to do their job with little face-to-face communication? Discuss.

Write program asks user to enter temperature : Write a program that asks the user to enter a temperature, and then shows all the substances that will freeze at that temperature and all the substances that will boil at that temperature.

Explain and identify the major forces that affected : Explain and Identify the major forces that affected the Japanese yen prior to the global financial crisis in the fourth quarter of 2008?

How many kilocalories should she be consuming : A piston, A, as shown below, has a diameter of 0.54cm. A second piston, B has a diameter of 3.7 cm. find the force, F, necessary to support the 500N weight in the absence of friction.

User Account

All Pages