fin355

1- Consider a project of the Pearson Company. The timing and size of the incremental after-tax cash flows for an all-equity firm are $-2000, $305, $610, $555, $500 from year 0 to 4 respectively. The unlevered cost of equity is 30%. a. Calculate the NPV? Should this project be accepted? b. The firm finances the project with $20000 debt at 11% with $100 after-tax flotation costs. Principal is repaid at $3000 per year with added interest. Pearson's tax rate is 60%. The net present value of the project under leverage? Now, Should this project be accepted