Find the npv of the new project to alpha

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Alpha Corporation has riskless debt with market value of $12 Million. It has 2 Million shares outstanding with share price of $15. Its equity beta is 0.9. Alpha plans to maintain the same capital structure in future. The risk-free rate is 5% and the market risk premium is 10%. The corporate tax rate is 20%. A new project with the same risk as the existing operations will require an initial investment of $500,000 and produce annual PRE-TAX cash flows of $200,000 for the next four years. Find the NPV of the new project to Alpha.

Reference no: EM133056353

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