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Determine whether or not the new vr project is a profitable

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Problem1 : SIMO VR is planning to build a new virtual reality device. The initial costs for this project is $950 million. The company believes that the new VR device produces revenue of $125, $175, $250, $275, $290, and $320 million respectively for the next 6 years. SIMO VR currently finances it's investment with 40 percent equity and 60 percent debt. Their tax rate is 34 percent and the yield to maturity of their existing bond is 9 percent. The market return and risk-free return are 17 and 6 percent respectively and SIMO VR's beta is 1.6. Using NOV analysis with WACC, determine whether or not the new VR project is a profitable investment for SIMO VR.

Reference no: EM132775685

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