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The Papillon Corporation is considering launching a new project, and it would like to do the math to figure out if it is worth it
The Papillon Corporation is considering launching a new project, and it would like to do the math to figure out if it is worth it The Papillon Corporation has no loans, and currently its cost of equity is The project would require an immediate investment of $ million to buy production equipment. The equipment will depreciate according to the straightline method, and its economic life is years. The Papillon Corporation expects that this year long project would bring "revenues minus costs of goods sold" in the amount of $ million each year. Use the company's cost of equity to discount their aftertax values. You also know that the TBill, or the riskfree, rate is per year. Use this rate to discount the riskfree cash flows from this project, such as the annual "depreciation tax shields" HINT: see Ch PowerPoint! The Papillon Corporation faces a income tax rate. First, find the project's estimated unlevered cash flows, and then calculate the project's unlevered net present value. Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to decimal places, eg Net present value
The Papillon Corporation is considering launching a new project, and it would like to do
the math to figure out if it is worth it
The Papillon Corporation has no loans, and currently its cost of equity is
The project would require an immediate investment of $ million to buy production
equipment. The equipment will depreciate according to the straightline method, and
its economic life is years. The Papillon Corporation expects that this year
long project would bring "revenues minus costs of goods sold" in the amount of $
million each year. Use the company's cost of equity to discount their aftertax values.
You also know that the TBill, or the riskfree, rate is per year. Use this rate to
discount the riskfree cash flows from this project, such as the annual "depreciation
tax shields" HINT: see Ch PowerPoint!
The Papillon Corporation faces a income tax rate.
First, find the project's estimated unlevered cash flows, and then calculate the project's
unlevered net present value. Do not round intermediate calculations and enter your
answer in dollars, not millions of dollars, rounded to decimal places, eg
Net present value
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