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Jensen Shipping is considering a project that has an initial cost of $215,000. The project will produce aftertax cash flows of $50,500 a year forever.
Jensen Shipping is considering a project that has an initial cost of $215,000. The project will produce aftertax cash flows of $50,500 a year forever. The firms WACC is 16.1 percent and its tax rate is 35 percent. Equity has a flotation cost of 11.1 percent while the flotation cost for debt is 5.5 percent. What is the net present value of this project, including the flotation costs, if the firms debt-equity ratio is 1.5? (Rounded)
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