Question
We are considering an investment opportunity with the following projected cashflow Year 0 1 2 3 4 CF -$8,000 $3,000 $4,000 $8,000 $3,000 We can
We are considering an investment opportunity with the following projected cashflow
| Year | 0 | 1 | 2 | 3 | 4 |
| CF | -$8,000 | $3,000 | $4,000 | $8,000 | $3,000 |
We can choose one of the following three capital structure plans:
| Debt | Equity | Cost of Debt | |
| Plan A | 20% | 80% | 4% |
| Plan B | 40% | 60% | 5% |
| Plan C | 90% | 10% | 9% |
The unlevered beta is 2.0, tax rate is 36%. Market return is 11% and risk-free rate is 3%.
What is the highest possible NPV?
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Foundations Of Financial Management
Authors: Stanley B. Block, Geoffrey A. Hirt, Bartley R. Danielsen
13th Edition
0073382388, 978-0073382388
