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Consider the following projects. Project C1 C2 C3 C4 C5 C6 -2,000 +1,000 10 10 10 +2.000 -3.000 1.000 1.000 +4.000 1.000 1.000 +2.000 -4,000
Consider the following projects. Project C1 C2 C3 C4 C5 C6 -2,000 +1,000 10 10 10 +2.000 -3.000 1.000 1.000 +4.000 1.000 1.000 +2.000 -4,000 -1,000 1,000 JO +1,000 1,000 +2.000 Assume that this firm's beta= 1.3 The expected market return is 8%. The risk free rate is 2.5%. This company can borrow debt at 7.5% The firm has $5 billion in debt. It has 6 billion shares outstanding at $5 price/shr. The corporate tax rate (TC) = 21% Question: What is the NPV of project B? Multiple Choice The NPV for project B is $4,706 The NPV for project B is $4.573 The NPV for project B is $4.448 The NPV for project B is $4.940 The NPV for project B is 4.255
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