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Och, Inc., is considering a project that will result in initial after-tax cash flow of $3.5 million at the end of the first year, and
Och, Inc., is considering a project that will result in initial after-tax cash flow of $3.5 million at the end of the first year, and these cash flows will grow at a rate of 4% per year indefinitely. The firm has a debtequity ratio of .55, a cost of equity of 13%, and an after-tax cost of debt of 5.5%. What should be the initial investments of this project to ensure a non-negative net present value of this project? Hint: Net present value = PV (all future cash flows) Initial investments.
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