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What is the maximum investment

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A company is considering a project that is expected to generate its first cash flow in the amount Of $1 million in 4 years. The cash flows thereafter are expected to grow 15% a year until the last cash flow in year 14. The appropriate annual discount rate for the project is 12%.

a. What is the maximum investment the company should dedicate for this project today?

b. A reevaluation of the project shows that starting from year 15 the project is going to generate the same cash flow it is expected to generate in year 14 every year forever. By how much does your answer to part a change?

Reference no: EM133120805

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