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You are a consultant to a large manufacturing corporation that is considering a project with the...

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Finance

You are a consultant to a large manufacturing corporation thatis considering a project with the following net after-tax cashflows (in millions of dollars):

Years from NowAfter-Tax Cash Flow
0–40
1–1014

The project's beta is 1.9.

a. Assuming that rf = 6%and E(rM) = 12%, what is the netpresent value of the project? (Do not round intermediatecalculations. Enter your answer in millions rounded to 2 decimalplaces.)

b. What is the highest possible beta estimatefor the project before its NPV becomes negative? (Roundyour answer to 2 decimal places.)

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