Total Present Value of the Project’s Cash Inflows Assignment | Homework For You
May 27th, 2020
Sisters Ltd is planning to invest in a capital project, which will generate cash inflows of $15,000 in the 1st year, $22,000 in the 2nd year, and $25,000 in the 3rd year. The project ends after year 3. The company’s current debt to equity ratio is 0.8 with the cost of debt of 8% p.a. compounded annually. Sisters Ltd stock has a beta of 1.2. The risk-free rate is 3% p.a. compounded annually and the expected market return is 10.5% p.a. compounded annually. The new debt to equity ratio as a result of financing the project is 1. What is the total present value of the project’s cash inflows?Get Finance homework help today
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