Question

Consider Corp X is introducing a product on a trial basis and the cost is $300 million. And the discounted cash flow (DCF) model based on the sales projections suggests that it will generate $280 million profit. If the trial is successful, it will introduce the product on a full-scale basis with an additional investment of $1.2 billion within the next 3 years. This investment estimates suggests that it would generate $950 on a DCF basis. Assume that the standard deviation of the underlying asset is 35%. Would you accept the project?

Answer 1

I would accept the project because the model if based of a reasonably profit