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A company is considering an investment project that generates a cash flow of $1,800,000 next year if the economy is favorable but generates only $760,000if
A company is considering an investment project that generates a cash flow of $1,800,000 next year if the economy is favorable but generates only $760,000if the economy is unfavorable. The probability of favorable economy is 65% and of unfavorable economy is 35%. The project will last only one year and be closed after that. The cost of investment is $1,350,000 and the company plans to finance the project with $550,000 of equity and $800,000 of debt. Assuming the discount rates of both equity and debt are 0%. What are the expected cash flows to the company's creditors if the company invests in the project? $758,000 $772,000 $786,000 $0 $500,000
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