Consultant to firm evaluating expansion of current business

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Reference no: EM13950149

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

Years Cash Flow

0 -300

1-10 80

a. On the basis of the behavior of the firm’s stock, you believe that the beta of the firm is 1.7. Assuming that the rate of return available on risk-free investments is 5% and that the expected rate of return on the market portfolio is 12%, what is the net present value of the project? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.)

NPV = $___________

b. Should the project be accepted? Yes or No?

Reference no: EM13950149

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