A project has a forecast cash flow of 128 in 1 year and 139


a project has a forecast cash flow of $128 in 1 year and $139 in year 2. The interest rate is 7%, the estimated risk premium on the market is 12.00% and the project has a beta of .68. If you use a constant risk-adjusted discount rate, what is

a. the pv of the project ?
b. The certainty-equivalent cash flow in year 1 and year 2 ?
c. The ratio of the centainty-equivalent cash flow to the expected cash flow in years 1 and 2 ?

 

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Finance Basics: A project has a forecast cash flow of 128 in 1 year and 139
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