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QUESTION 8 Consider a project with free cash flows in one year of $130,936 or...

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Finance

QUESTION 8

Consider a project with free cash flows in one year of $130,936 or $202,748, with each outcome being equally likely. The initial investment required for the project is $120,253, and the projects cost of capital is 24%. The risk-free interest rate is 8%. Suppose that to raise the funds for the initial investment, the project is sold to investors as an all-equity firm. The equity holders will receive the cash flows of the project in one year. How much money can be raised in this waythat is, what is the initial market value of the unlevered equity?

NOTE: Submit your answers with 4 decimals after the dot. Do not include the "$" sign

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