Question
Final Inc. is evaluating a short term project that requires a $200,000 investment. The anticipated cash flows are $50,000 in the first year, $30,000 in
Final Inc. is evaluating a short term project that requires a $200,000 investment. The anticipated cash flows are $50,000 in the first year, $30,000 in the second year, and $170,000 for the third year. Theres no salvage value for this project. Final Inc. has a D/E ratio of 1/2. Their most recent $1000 face value bond is selling for $1100. This bond has a coupon rate of 10% which is paid semiannually and has 10 years to maturity. Final Inc. just paid a dividend of five dollars and its stock is currently selling for $95. The company is anticipated to grow at 3% for the foreseeable future. The applicable corporate tax rate for Final is 20%.
What is the approximate cost of debt for final inc. before taxes?
Continuing with the previous question, what is the cost of equity for Final?
Continuing with the previous question, what is the WACC for Final?
Continuing with the previous question, what is the approximate in NPV of this investment?
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