Pentagon international is considering an investment that


Pentagon International is considering an investment that has net flows (FEO + - Investments + - Working Capital) of USD 500,000 in year zero. There will be no net flows for the next 5 years and as of year 6 the project will deliver net flows of USD 12,000 with a growth rate of 6% in perpetuity. Pentagon International has a target debt ratio of 3/2, a beta of 1.25 and a cost of debt is 9%. It is known that both the market risk premium and the risk free rate are% 8 and the tax rate is 34%. How much minimum income should be for the next 10 years for this investment to be profitable.

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Financial Management: Pentagon international is considering an investment that
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