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Dyrdek Enterprises has equity with a market value of $ 1 1 . 0 million and the market value of debt is $ 3 .

Dyrdek Enterprises has equity with a market value of $11.0 million and the market value of
debt is $3.65 million. The company is evaluating a new project that has more risk than the
firm. As a result, the company will apply a risk adjustment factor of 1.8 percent. The new
project will cost $2.24 million today and provide annual cash flows of $586,000 for the next
6 years. The company's cost of equity is 11.15 percent and the pretax cost of debt is 4.90
percent. The tax rate is 39 percent. What is the project's NPV
A) $379,626
B) $211,291
C) $245,055
D) $228,419

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