What is the npv of the proposal and should it be undertaken

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Reference no: EM131300377

Corregin Ind. is trying to analyze it capital structure and the various cost components therein. Various inputs include the risk free rate which is 2.8%, ß for the firm is .97, and the expected return on the market is 10.65%. No preferred stock is used by the firm, but there are 127 Million shares of stock outstanding selling at a market price of $13.16/share and $825,000,000 of face value debt selling in the credit markets at 97.525% of par. The after-tax cost of debt is 7.125% and the marginal corporate income tax rate is 32.5%.

Corregin is faced with an investment proposal that costs $2.3257 Billion. If the project is of average risk level for the firm and it expects a perpetual annual cash flow of $215,345,000, what is the NPV of the proposal and should it be undertaken?

Reference no: EM131300377

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What is the npv of the proposal and should it be undertaken : Corregin Ind. is trying to analyze it capital structure and the various cost components therein. Various inputs include the risk free rate which is 2.8%, ß for the firm is .97, and the expected return on the market is 10.65%. Corregin is faced with a..

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