Question
A firm has a target debt-equity ratio of 0.8. The cost of debt is 5.5% and the cost of equity is 15.5%. The company has
A firm has a target debt-equity ratio of 0.8. The cost of debt is 5.5% and the cost of equity is 15.5%. The company has a 30% lax rate. A project has an initial cost (Investment) of $62,000 and an annual after-tax cash flow of $22,000 for 7 years. There is no salvage value or net working capital requirement. What is the nel present value of the project using the WACC? You can ignore investment depreciation tax shields for this questions. NOTE: Keep at least 4 decimal places for INTERMEDIATE CALCULATIONS. Enter your FINAL ANSWER to TWO decimal places. Do NOT include a $ sign. Numeric Response---
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