Question
A project with a perpetual EBIT of $600,000 per year has an initial cost of $3.28 million. The debt-equity ration is 2:3, the pre-tax cost
A project with a perpetual EBIT of $600,000 per year has an initial cost of $3.28 million. The debt-equity ration is 2:3, the pre-tax cost of debt is 9%, and the beta of equity is 1.40. Also, the risk free rate is 5%, the market risk premium is 6%, and the tax rate is 40%. What is the NPV of the project? (Ignore cents)
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Finance Applications and Theory
Authors: Marcia Cornett
4th edition
1259691411, 978-1259691416
