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Question #4 Taggart Transcontinental is considering a $250 million investment to launch a new rail line. The project is expected to generate a free cash
Question #4 Taggart Transcontinental is considering a $250 million investment to launch a new rail line. The project is expected to generate a free cash flow of $32 million per year forever, and its unlevered cost of capital is 8%. Taggart's marginal corporate tax rate is 35%. Assuming that to fund the investment Taggart will take on $250 million in permanent debt and ignoring issuance costs, the NPV of Taggart's new rail line is closest to:(20 points)
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