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The flOw-To-Equity Approach Has Been Used by the fiRm to Value

question 42

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The flow-to-equity approach has been used by the firm to value their capital budgeting projects. The total investment cost at time 0 is €640,000.The company uses the flow-to-equity approach
Because they maintain a target debt to value ratio over project lives.The company has a debt to
Equity ratio of 0.5.The present value of the project including debt financing is €810,994.What is the
Closest relevant initial investment cost to use in determining the value of the project?


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