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blackcat900Lv1
28 Sep 2019
A firm is considering a project that will generate perpetual after-tax cash flows of $24,500 per year beginning next year. The project has the same risk as the firmâs overall operations and must be financed externally. Equity flotation costs 12 percent and debt issues cost 3 percent on an after-tax basis. The firmâs D/E ratio is 0.5. What is the most the firm can pay for the project and still earn its required return?
A firm is considering a project that will generate perpetual after-tax cash flows of $24,500 per year beginning next year. The project has the same risk as the firmâs overall operations and must be financed externally. Equity flotation costs 12 percent and debt issues cost 3 percent on an after-tax basis. The firmâs D/E ratio is 0.5. What is the most the firm can pay for the project and still earn its required return?
Tod ThielLv2
28 Sep 2019