Question
Waterdeep Adventure Travel has an unlevered cost of equity of 19.5%, and a cost of debt of 7.2%. Their tax rate is 37%, and they
Waterdeep Adventure Travel has an unlevered cost of equity of 19.5%, and a cost of debt of 7.2%. Their tax rate is 37%, and they maintain a capital structure of 57% debt and the rest equity. They are considering giving cave exploration tours to their menu of adventure vacations. Buying the needed equipment would cost $88,210, and would bring in $31,549 one year from today, and $89,127 two years from today. What is the NPV of this project, using the WACC method, if they invest today? Please give your answer to the nearest dollar. ANSWER is -28,811.845!! How do I get to that answer of -28,811.845?
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