What is the ?rm cost nf capital

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XYZ Corp. has 15 million shares ufeamnlon stuck outstanding. The common stock currently sells for 560 pa share and has a beta of2. XYZ Corp. has 290,000 bonds outstanding and sell for 110% of par value. The ytnl (yield to maturity) of the bond is 6% p.3. The market risk premium is 7%, T-bills are yielding 4% p.3 and corporate tax rate is 25%. All pa. rates are EAR. What is the ?rm's market value capital structure (Le. Market value ufdebtJMarket value of equity)? What is the ?rm's cost nf capital? If XYZ Corp. is evaluating a new investment project that has an investment of $50 million at year 0 and is expected to have a cash ?ow of $20 million from Year 1 onwards growing at the rate of 5% p.a. forever, what is the NPV of the project?

Reference no: EM133057963

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