Question
Rearden Metal is evaluating a project that requires an investment of $150 million today and provides a single pre-tax cash flow of $180 million for
Rearden Metal is evaluating a project that requires an investment of $150 million today and provides a single pre-tax cash flow of $180 million for sure one year from now. Rearden decides to use 100% debt financing for this investment. The risk-free rate is 5% and Rearden's corporate tax rate is 40%. Assume that the investment is fully depreciated at the end of the year. The NPV of this project using the APV method is closest to: A. $10 millions B. $13 millions C. $42 millions D. $71 millions
ANSWER IS B:$13 MILLION - PLEASE DONT RESPOND UNLESS ARRIVE AT THIS ANSWER
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