Solution :- (1)
Annual Incremental Cash flows = $50 millions
Growth Rate = 5%
Compute present value of the cash flows at WACC and subtract investment costs as well as issuance costs.
PV project cash inflows = $50 / (0.09 - 0.05) = $1,250 ;
Cash outflows = 420 + 15 = 435;
NPV = $1,250 - $435 = $815 million
Therefore Correct Answer is (D)
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