Question
Algoma Incorporated has a capital structure which is based on 35 % debt, 15 % preferred stock, and 50 % common stock. The after-tax cost
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Algoma Incorporated has a capital structure which is based on 35 % debt, 15 % preferred stock, and 50 % common stock. The after-tax cost of debt is 7 %, the cost of preferred is 8 %, and the cost of common stock is 10%. The company is considering a project that is equally as risky as the overall firm. This project has initial costs of $140,000 and cash inflows of $90,000 a year for two years. What is the projected net present value of this project?
$18,221.47
$17,571.58
21,356.22
$19,074.82
$18,427.44
Algoma Incorporated has a capital structure which is based on 35 % debt, 15 % preferred stock, and 50 % common stock. The after-tax cost of debt is 7 %, the cost of preferred is 8 %, and the cost of common stock is 10%. The company is considering a project that is equally as risky as the overall firm. This project has initial costs of $140,000 and cash inflows of $90,000 a year for two years. What is the projected net present value of this project?
| $18,221.47 | ||
| $17,571.58 | ||
| 21,356.22 | ||
| $19,074.82 | ||
| $18,427.44 |
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Handbook Of Key Global Financial Markets Institutions And Infrastructure
Authors: Gerard Caprio
1st Edition
0123978734, 9780123978738
