Question
Fitzgerald Industries has a new project available that requires an initial investment of $5 million. The project will provide unlevered cash flows of $838,000 per
Fitzgerald Industries has a new project available that requires an initial investment of $5 million. The project will provide unlevered cash flows of $838,000 per year for the next 20 years. The company will finance the project with a debt-value ratio of .35. The companys bonds have a YTM of 5.9 percent. The companies with operations comparable to this project have unlevered betas of 1.18, 1.11, 1.33, and 1.28. The risk-free rate is 3.3 percent and the market risk premium is 6.5 percent. The tax rate is 23 percent. |
What is the NPV of this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89) |
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