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Ariana, Incorporated, is considering a project that will result in initial aftertax cash savings of $ 3 . 8 million at the end of the
Ariana, Incorporated, is considering a project that will result in initial aftertax cash savings of $ million at the end of the first year, and these savings will grow at a rate of percent per year, indefinitely. The firm has a target debtequity ratio of a cost of equity of percent, and an aftertax cost of debt of percent. The costsaving proposal is somewhat riskier than the usual project the firm undertakes; management uses the subjective approach and applies an adjustment factor of percent to the cost of capital for such risky projects.
Calculate the discount rate for the project.
Note: Do not round intermediate calculations and enter your answer as a percent rounded to decimal places, eg
What is the maximum cost the company would be willing to pay for this project?
Note: Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to decimal places, eg
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