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Show all handwritten work. Do not use excel or other software. 7. Consider the following (market-value) data for lota Industries: (11 points) Assets Liabilities Cash
Show all handwritten work. Do not use excel or other software.
7. Consider the following (market-value) data for lota Industries: (11 points) Assets Liabilities Cash 250 Debt 650 Existing Assets 1200 Equity 800 lota has an equity cost of capital of 14% and a debt cost of capital of 7%. Marginal corporate tax rate = 35%. a) If lota maintains a constant debt-equity ratio, compute the NPV of a project with average risk and the following expected free cash flows: Year O 1 2 3 Free Cash Flow -$250 $75 $150 $100Step by Step Solution
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