A project with a beta of 0.75 generates after-tax incremental cash flows of $20,000 per year. The expected return on the market is 8% and the risk free rate is 3%. For how many years must the project generate cash flows in order for the project to just be an acceptable investment for an organization if the initial investment required for the project is $50,000?

A project with a beta of 0.75 generates after-tax incremental cash flows of $20,000 per year. The expected return on the market is 8% and the risk free rate is 3%. For how many years must the project generate cash flows in order for the project to just be an acceptable investment for an organization if the initial investment required for the project is $50,000?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter14: Real Options

Section: Chapter Questions

Problem 3MC: Tropical Sweets is considering a project that will cost $70 million and will generate expected cash...

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