Question
A projects cost is $27.60 million. Of this, $10 million was financed with debt at a pre-tax cost of 12%. The project is expected to
A projects cost is $27.60 million. Of this, $10 million was financed with debt at a pre-tax cost of 12%. The project is expected to produce a levered cash flow of $3.60 million dollars per year in perpetuity. The tax rate is 40%. If the WACC is 15%, what is the NPV of the project?
A. -$3.60 million B. -$2.70 million C. $1.20 million D. $2.80 million E. None of the above
show details of your work please
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Intermediate Accounting Volume 1
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
12th Canadian edition
978-1119496496
