A firm is considering investing in a new project with an upfront cost of $400 million. The project will generate an incremental free cash flow of $50 million in the first year and this cashflow is expected to grow at an annual rate of 4% forever. If the firm's WACC is 13%, what is the value of this project?
A) $177.8 million
B) $577.8 million
C) $155.6 million
D) $555.6 million
Correct Answer:
Verified
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