What is the net present value of the project

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Please list all the formula and calculation.

The firm has 18-year, semi-annual bonds with a 6% annual coupon rate. The face value of each bond is $1,000. The bond is currently selling for 96% of its face value. The tax rate is 35%. What is the firm's after-tax cost of debt? A. 3.19% B. 4.15% C. 2.07% D. 6.38%

A firm is considering a project that will result in a cash inflow of $500 at the end of the first year. The cash inflow will grow at the constant rate of 6% per year forever. The firm finances through debt and equity, and has a debt-equity ratio of 1/3, a cost of equity of 18%, and a cost of debt of 8%. Assume the project has the same risk as the overall firm. Assuming the tax rate is 35%. If the project's initial cost is $3,500, what is the net present value of the project?

A. 3,054.2

B. 5,681.8

C. 2,181.8

D. 2,986.3

Reference no: EM132199197

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