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Chadstone Technology is planning to invest in a new project that has average risk and the firm wants to keep its debt-to-equity ratio constant.

Chadstone Technology is planning to invest in a new project that has average risk and the firm wants to keep

Chadstone Technology is planning to invest in a new project that has average risk and the firm wants to keep its debt-to-equity ratio constant. Below you will find the firm's market value balance sheet and cost of capital figures including its corporate tax rate. Assets Cash $0 Other Assets $800 Equity $500 Equity Year Cost of Capital Debt $300 Debt Free Cash Flows Liabilities 0 And the table below shows the new project's free cash flows. 1 Corporate tax rate 2 3 -$120 $60 $80 $90 5% The NPV of the firm's new project is closest to: 10% 30%

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181 WACC 182 183 Equity 184 Debt cost of debt1tax 185 186 187 188 Calculation of NPV 189 Discount Ra... blur-text-image

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