The Rare Find Co.has the following information: Debtoutstanding:$400million Before-tax cost of debt:5% Market cap:$7,500million Cost of common
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Question:
The Rare Find Co.has the following information:
Debtoutstanding:$400million
Before-tax cost of debt:5%
Market cap:$7,500million
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:20million each year.
An investment of$25million 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$90million depreciated using straight-line to zero over the project's life,with no salvage value.
The project requires an additional1%risk premium above the firms WACC.
***Calculate the net present value for the project.(Enter the full number, e.g.5,000,000)
Posted Date: