A retail coffee company is planning to open 105 new coffee outlets that are expected to generate $13.8 million in free cash flows per year, with a growth rate of 3.3% in perpetuity. If the coffee company's WACC is 9.5%, what is the NPV of this expansion? The present value of the free cash flows is $ million. (Round to two decimal places.)

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 20EA: Towson Industries is considering an investment of $256,950 that is expected to generate returns of...
Question
A retail coffee company is planning to open 105 new coffee outlets that are expected to generate $13.8 million in free
cash flows per year, with a growth rate of 3.3% in perpetuity. If the coffee company's WACC is 9.5%, what is the NPV
of this expansion?
The present value of the free cash flows is $
million. (Round to two decimal places.)
Transcribed Image Text:A retail coffee company is planning to open 105 new coffee outlets that are expected to generate $13.8 million in free cash flows per year, with a growth rate of 3.3% in perpetuity. If the coffee company's WACC is 9.5%, what is the NPV of this expansion? The present value of the free cash flows is $ million. (Round to two decimal places.)
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