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Question 3 7 pts Acme Corp has a target capital structure of 30% debt and 70% equity. It has $300 million in bonds outstanding with

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Question 3 7 pts Acme Corp has a target capital structure of 30% debt and 70% equity. It has $300 million in bonds outstanding with a yield of 8% and 50 million shares of stock outstanding with a current market price of $14.00 per share. The company's beta is 1.25 and the risk-free rate of interest is 4% with a market risk premium of 6%. The firm has a tax rate of 25%. The company is looking to raise $250 million to build a second factory. The new factory will increase output substantially. The table below shows the anticipated cash flows generated from the new factory including a salvage value in year 5. What is the NPV of this project? Year Cash Flow (Smill) 0 -250 1 35 2 95 3 95 4 125 5 15 $27.48 million $33.73 million $29.54 million $37.87 million

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