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Finance 8 Online
OpenStudy (anonymous):

can u help on how what is the asnwer of the following problem please? The weighted average cost of capital of MyWorld, Inc. is 8.50%, and its equity beta is 0.90. and would like its total value to consist of 70% software and 30% wine. The wine project requires a $800,000 investment at t = 0 and will yield $150,000 a year for the following 40 years, starting a year from today (at t = 1). the average return on equity is 20%, and the average debt-to-equity ratio is 1.00, in the wine industry. The risk free rate is 4%, the market risk premium is 5%, and the wine project will be financed with $600,000 of debt. What is the NPV of this project?

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