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A project is expected to generate cash flow from assets equal to $250,000 at the end...

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Finance

A project is expected to generate cash flow from assets equal to$250,000 at the end of the year. The cash flows are expected togrow at 4% for the next 20 years. At the end of the 20 years, theproject will no longer be viable, but the company will be able tosell off related equipment at an after tax salvage value of$1,000,000. The cost of capital for this project is 8%.

The company is considering selling off this project. If the debtassociated with this project is $2,000,000, what is the equityvalue of the project?

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