Question 24 [Q24-35] Your firms market value balance sheet is given as follows: Market Value Balance Sheet Excess cash $30M Debt $230M Operating Assets $500M Equity $300M Asset Value $530M Debt + Equity $530M Assume that the you plan to keep the firms debt-to-equity ratio fixed. The firms corporate tax rate is 50%. The firms cost of debt is 10% and cost of equity is 20%. Now, suppose that you are considering a new project that will last for one year. According to your analysis, free cash flows from the project are -$1,000 today (i.e. year 0) and $1,322.40 one year from today (i.e. year 1). This new project can be viewed as a carbon copy of the entire firms existing business. You want to find the NPV of the project using three different DCF methods: WACC/APV/FTE.

What is the FCFE at year 1? (Hint: You repay the debt of $464 at time 1.)

	A.	-$835.20
	B.	$536
	C.	$835.20
	D.	-$536