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bluefly362Lv1
28 Sep 2019
A levered firm has a target capital structure of 30 percent debt and 70 percent equity. The aftertax cost of debt is 6.5 percent, the tax rate is 34 percent, and the cost of equity is 12.3 percent. The firm is considering a project that is equally as risky as the overall firm. The project has an initial cash outflow of $1.1 million and annual cash inflows of $480,000 at the end of each year for three years. What is the NPV of the project?
A levered firm has a target capital structure of 30 percent debt and 70 percent equity. The aftertax cost of debt is 6.5 percent, the tax rate is 34 percent, and the cost of equity is 12.3 percent. The firm is considering a project that is equally as risky as the overall firm. The project has an initial cash outflow of $1.1 million and annual cash inflows of $480,000 at the end of each year for three years. What is the NPV of the project?
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Beverley SmithLv2
28 Sep 2019
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