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Company A Market Value Balance Sheet ($ Million) and Cost of Capital Assets Liabilities& Equity Cost of Capital Cash 0 Debt 200 Debt 8% Other
Company A Market Value Balance Sheet ($ Million) and Cost of Capital | |||||
Assets | Liabilities& Equity | Cost of Capital | |||
Cash | 0 | Debt | 200 | Debt | 8% |
Other Assets | 500 | Equity | 300 | Equity | 15% |
t_c | 40% |
Free Cash Flows of Company ABC's New Project | ||||
Year | 0 | 1 | 2 | 3 |
Free Cash Flows | -$ 100.00 | $ 50.00 | $ 50.00 | $ 50.00 |
Assume that this new project is of average risk for Company ABC and that the firm wants to hold constant its debt-to-equity ratio.
The NPV for Company ABC 's new project is closest to:
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