Question
Biksler Corporation is considering a project that costs $15,000,000 and will increase the after-tax cash flows by $3,500,000 per year for five years. The company
Biksler Corporation is considering a project that costs $15,000,000 and will increase the after-tax cash flows by $3,500,000 per year for five years. The company has total assets of $380,000,000 and total debt of $133,000,000. The borrowing rate is 7 percent, the corporate tax rate is 24%, the risk-free rate is 1.9%, the beta of the stock is .9, and the return on the market is 11 percent.
6. The percent of debt in the capital structure is ________
7. The cost of equity is __________
8. The weighted average cost of capital is __________
9. The NPV of the project is _________
10. Should Glenn undertake the project? Why or why not? Explain
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