Considering a project that will generate perpetual cash flow

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Reference no: EM13927936

A firm is considering a project that will generate perpetual cash flows of $50,000 per year beginning next year. The project has the same risk as the firm's overall operations. If the firm's WACC is 12%, and its debt-to-equity ratio is 1.33, what is the most it could pay for the project and still earn its required rate of return?

A: $313,283

B: $375,094

C: $416,667

D: $554,167

Reference no: EM13927936

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