Initial Investment: $15.000 Salvage Value: $4,000 Yearly Revenue: $6,000 Yearly Expenses: $2.000 Annual Depreciation: $3,000 Project Life: 5 years Cost of Capital: 8.8% Tax rate: 25% Calculate the NPV of the project $2.285.03 5-9.443.85 $-337.80 51.629.98 UniversalAPT is looking to build an innovation campus. This campus costs $15 million upfront and will produce incremental new cash flows of $2 million per year for thepext 14 years. UniversalAPT owns the land where it intends to build the innovation campus. The company already spent ST million to excavate this land and prepare it for development. Rather than building the campus, UniversalAPT has a offer from a competitor to purchase the land from UniversalAPT for a net cash flow of $3 million. If UniversalAPT's required return is 9.8%, should it build the plant? How much value does this project create for destroy) in present value terms? Yes, creates 50.88 mil No, destroys $4.10 mil Yes. Creates 51 10 mil No destroys $3.10 mil Icon Inc has two different options of 20-year maturity coupon bonds to issue; one set of bonds will have a callable provision, while the other set will not have a callable provision. If both types of bond have the same coupon rate, which bond will have the higher price, the callable or non-callable bond? If, instead, the bonds are both to be sold to the public at face value, which bond must have the higher coupon rate? Non-callable sells at higher price; Cattable has higher coupon rate Callable sells at higher price: Non-callable has higher coupon rate Non-callable sells at higher price: Non-callable has higher coupon rate Callable sells at higher price: Callable has higher coupon rate Two years ago, Fortrade Inc. issued $10 million in long-term bonds that now have eight years remaining until maturity. The bonds have a 7% coupon rate and have a current price of $1,07155. Fortrade also has $25 million in market value of common stock. For cost of capital purposes, what portion of the firm is debt financed and what is the after-tax cost of debt. If the tax rate is 35%? 30.00% debt financed: 3.81% after-tax cost of debt 28.57% debt financed: 191% after-tax cost of debt 70.00% debt financed: 4 55% after-tax cow of debt 40.00% debt financed: 2.93% after-tax cost of debt