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Consider a project with free cash flows in one year of $90,000 in a weak economy or $117,000 in a strong economy, with each outcome being equally likely. The initial investment required for the project is $80,000, and the project's cost of capital is 15%. The risk-free interest rate is 5%.

Sisyphean Bolder Movers Incorporated has no debt, a total equity capitalization of $50 billion, and a beta of 2.0. Included in Sisyphean's assets are $12 billion in cash and risk-free securities.

Required: Calculate Sisyphean's enterprise value and unlevered beta considering the fact that Sisyphean's cash is risk-free

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M91892375

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