Question
A new firm requires an initial investment of $500 and will generate a before-tax gross return of $600 after one year and then shut down.
A new firm requires an initial investment of $500 and will generate a before-tax gross return of $600 after one year and then shut down. The firm is partially financed with $200 of debt at an expected return of 4%. The appropriate unlevered after-tax cost of capital is 14% and the marginal income tax rate is 21%.
What is the expected after-tax cash flow for an all-equity firm?
What is the APV?
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Python For Finance
Authors: Yves Hilpisch
2nd Edition
1492024333, 978-1492024330
