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Vargo has a target debt-to-value ratio of .75. The pretax cost of debt is 8.5%, the tax rate is 20%, and the cost of assets
Vargo has a target debt-to-value ratio of .75. The pretax cost of debt is 8.5%, the tax rate is 20%, and the cost of assets is 12%. A project the firm is considering has a cash flow to shareholders of $75,000 per year for 4 years. The project requires an initial un-borrowed cost of $187,000. What is the NPV of this project?
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