What is the npv of the project

Assignment Help Financial Management

Reference no: EM131526749

A levered firm has a target capital structure of 30 percent debt and 70 percent equity. The aftertax cost of debt is 6.5 percent, the tax rate is 34 percent, and the cost of equity is 12.3 percent. The firm is considering a project that is equally as risky as the overall firm. The project has an initial cash outflow of $1.1 million and annual cash inflows of $480,000 at the end of each year for three years. What is the NPV of the project?

Reference no: EM131526749

Questions Cloud

Ssume it will take you exactly one year to get to tucson : Assume it will take you exactly one year to get to Tucson (the mare is very slow). Should you undertake this trip, or just stay home?

What is the value of a european call option : What is the value of a European call option if the underlying stock price is $131, the strike price is $120, the underlying stock volatility is 42 percent, and

Estimating the cost of capital : The cost of capital is 15%. In this case, is it worse to commit 10% error in estimating the cash flow or to commit a 10% error in estimating the cost of capital

Which bond would you recommend to each of these two investor : Which bond would you recommend to each of these two investors? Why?

What is the npv of the project : A levered firm has a target capital structure of 30 percent debt and 70 percent equity. What is the NPV of the project?

Ew automated bank teller business of rapid growth : What is an appropriate beta for the new automated bank teller business of Rapid Growth?

Expected sales and operating costs : Project A has the following expected sales and operating costs (these do not include depreciation).

What is the value of hl equity and the value of its debt : The going rate on one-year T-bills is 1.02 percent. What is the value of HL equity? The value of its debt?

Switched to an all-equity financial structure : What would be the beta of the firm if it switched to an all-equity financial structure?

User Account

All Pages