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Exxon-Mobil is thinking about a new project that will be financed with all debt. This project will increase their free cash flows by $100 per
Exxon-Mobil is thinking about a new project that will be financed with all debt. This project will increase their free cash flows by $100 per year for the next 10 years. The unlevered cost of capital for the project is 15%. The project costs $300 at time 0. Exxon can raise debt with a coupon rate of 5%. The cost of debt (i.e. YTM) is also 5%. Finally, Exxons tax rate is 30%. Find the NPV of the project if Exxon takes debt with a maturity of 10 years to finance the project.
A. 236.63
B. 286.32
C. 342.24
D. 523.32
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