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A Firm Is Considering Investing in a New Project with an Upfront

Question 85

Multiple Choice

A firm is considering investing in a new project with an upfront cost of $400 million.The project will generate an incremental free cash flow of $50 million in the first year and this cash flow is expected to grow at an annual rate of 4% forever.If the firm's WACC is 13%,what is the value of this project?


A) $155.6 million
B) $555.6 million
C) $577.8 million
D) $177.8 million
E) $181.4 million

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