Question
I have the correct answer, but I want to know the steps on EXCEL getting there. Please show all steps, equations, and calculations. I will
I have the correct answer, but I want to know the steps on EXCEL getting there. Please show all steps, equations, and calculations. I will give a thumbs up when all the work is shown. Also, please do it the fastest/simplest way on EXCEL (for example, if you can use NPV function). Thank you!
Consider a project of the Cornell Haul Moving Company, the timing and size of the incremental after-tax cash flows (for an all-equity firm) are shown below in millions:
0 -990
1 $125
2 $250
3 $375
4 $500
The firm's tax rate is 34 percent; the firm's bonds trade with a yield to maturity of 8 percent; the current and target debt-equity ratio is 2; if the firm were financed entirely with equity, the required return would be 10 percent. Using the weighted average cost of capital methodology, what is the NPV? Correct answer is given: $12,494,644
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