Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

McCann Catching, Inc. has 2.00 million shares of stock outstanding. The stock currently sells for $12.77 per share. The firms debt is publicly traded and

McCann Catching, Inc. has 2.00 million shares of stock outstanding. The stock currently sells for $12.77 per share. The firms debt is publicly traded and was recently quoted at 90.00% of face value. It has a total face value of $13.00 million, and it is currently priced to yield 9.00%. The risk free rate is 2.00% and the market risk premium is 8.00%. Youve estimated that the firm has a beta of 1.24. The corporate tax rate is 39.00%. The firm is considering a $47.43 million expansion of their production facility. The project has the same risk as the firm overall and will earn $11.00 million per year for 6.00 years. What is the NPV of the expansion? (answer in terms of millions, so 1,000,000 would be 1.0000) Submit Answer format: Currency: Round to: 4 decimal places.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Investment Risk Management

Authors: Yen Yee Chong

1st Edition

0470849517, 9780470849514

More Books

Students also viewed these Finance questions