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A company pursues a cost-cutting initiative that costs $21,000 to implement. Thereafter, however, the initiative reduces after-tax costs by $6,500 per year perpetually. The company
A company pursues a cost-cutting initiative that costs $21,000 to implement. Thereafter, however, the initiative reduces after-tax costs by $6,500 per year perpetually. The company relies on 64% debt financing at a 11.4% pretax interest rate. The company's marginal tax rate is 31%. The company is 1.41, short-term risk-free rate is 7.4%, and required risk premium for the market portfolio is 11.0%. Find the projects net present value.
$25,399 | |
$23,090 | |
$19,083 | |
$20,991 | |
$27,939 |
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