You are a consultant to a large manufacturing corporation that is considering a project with the following net after tax cash flows (in millions of dollars):
|
Years from Now |
After Tax Cash Flow |
|
0 |
40 |
|
1–10 |
15 |
The project’s beta is 1.8. Assuming that rf = 8% and E(rM) =16%, what is the net present value of the project? What is the highest possible beta estimate for the project before its NPV becomes negative?