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What is the net present value of project for top-down inc

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Question 1: Top-down, Inc. finances it's operations using $1.50 of debt for every $2 of common stock. The pre tax cost of debt is 7.5% the cost of equity is 11% and the tax rate is 34%. Currently the firm is considering a small project that it considers to be equally as risky as the overall firm. The project has an initial cash outlay of $18,500 and is expected to have a single cash inflow of $25,000 at the end of year two. What is the net present value of this project?

Option A. $2,107

Option B. $2,773

Option C. $2,835

Option D. $2,350

Option E. $2,807

Reference no: EM132604163

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