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How much new equity will energy need to start the project

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Energy corp has a market capitalization of $15 billion and debt with market value of $5 billion. Energy will keep its current Debt/Equity ratio constant. The equity cost of capital is rE= 10% and the cost of debt is rD=6%. The corporate tax rate is 35%. Assume a market risk premium of 6% and a risk-free rate of 5%

Assume (correctly or incorrectly) that NPV of the project is $65 million. How much new equity will Energy need to start the project.

Reference no: EM132396629

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