What is the value of the project if the corporate tax rate

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A new project is expected to have a FCF of $6 Million one year from today.The yearly cashflows will increase by 2.8% per year, forever. Your firm has $200M in equity and $200M in debt. You will maintain a target D/E ratio throughout the life of the project equal to the current D/E ratio of your firm. Your firm has an expected return on equity of 12% and an expected return on debt of 6%. What is the value of the project if the corporate tax rate is 40%? Please list out the formula involved in answering the question.

Reference no: EM131878236

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