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Market value of a project with expected future ufcf

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Reference no: EM133204946

Consider a large corporation considering a project with the following expected unlevered free cash flows (UFCF).

Year 1 2 3

E0(UFCF) 80 80 80

Based upon the CAPM, the discount rate for these UFCF is rU = 8% per year. Determine the market value (unlevered) of this project.

*This is a simple PV calculation. The discount rate for unlevered free cash flows is 8%.

Note the market value (unlevered) of a project is the PV(of the future UFCFS).

The NPV of a project is this value minus the PV of the initial investment.

Here we just want the market value of a project with these expected future UFCF.

Reference no: EM133204946

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