Determine the project irr and cost of capital

Reference no: EM1373158

Determine the project IRR and the cost of capital for the project? Does the accept reject decision using IRR agree with the decision using NPV?

You are a consultant to a company evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are:

Years: 0, Cash Flow: -100

Years: 1-10, Cash Flow: +15

Based on the behavior of the company's stock, you believe that the beta of the firm is 1.4. Assuming that the rate of return available on risk-free investments is 4 percent and that the expected rate of return on the market portfolio is 12 percent, Determine the net present value of the project?

Reference no: EM1373158

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