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 Now | After-Tax Cash Flow |
| 0 | –40 |
| 1–10 | 14 |
|
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.)
