Question
The Rare Find Co. has the following information: Debt outstanding: $400 million Before-tax cost of debt: 5% Market cap: $7,500 million Cost of common stock:
The Rare Find Co. has the following information:
Debt outstanding: $400 million
Before-tax cost of debt: 5%
Market cap: $7,500 million
Cost of common stock: 8%
Tax rate: 21%
Rare Find is evaluating a project with the following information:
Over the next five years EBIT will equal: 20 million each year.
An investment of $25 million is required in net working capital at the beginning of the project, which will be recovered at the end of the project.
The cost of the equipment will be $90 million depreciated using straight-line to zero over the project's life, with no salvage value.
The project requires an additional 1% risk premium above the firms WACC.
Calculate the net present value for the project. (Enter the full number, e.g. 5,000,000)
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