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You are a financibl analyst at a major business valuation firm. You are analyzing how...

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You are a financibl analyst at a major business valuation firm. You are analyzing how a change in beta will impact the present value of corporation that is considering an irvestment project. The project requires an initial investment of $100 milion and will generate an after-tax cash of $20 milion in the first year and the cash fow will increase 5.5 thereater every year. The projecrs beta is 12 . Assume that risk free rate is 6% and the rotum on the markot is 8%. Please answer the following questicns. a) What is the net present value of the project ? (sample answer.5115 million) b) What is the highest possible discount rate for the project before its NPV becomes negative ? (sample answer: 15.45% ) c. What is the highest possible beta estimate for the project before hs NPV becomes negative ? (sample answer: 1.24)

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