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2.)

Dyrdek Enterprises has equity with a market value of $12.6 million and the market value of debt is $4.45 million. The company is evaluating a new project that has more risk than the firm. As a esult, the company will apply a risk adjustment factor of 1.9 percent. The new project will cost $2.56 million today and provide annual cash flows of $666,000 for the next 6 years. The company's cost of equity is 11.79 percent and the pretax cost of debt is 5.06 percent. The tax rate is 21 percent. What is the project's NPV? Multiple Choice $205,072 $383,149 $556,060 $183,363 $194,561 Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing $681,000 that would be depreciated on a straight-line basis to zero over the 5 -year life of the project. The equipment will have a market value of $184,000 at the end of the project. The project requires $54,000 initially for net working capital, which will be recovered at the end of the project. The operating cash flow will be $173,600 a year. What is the net present value of this project if the relevant discount rate is 12 percent and the tax rate is 21 percent? Multiple Choice 512,688 53,911 $13,664 $11,419 $9,635