Question
xyz corp. has a stock price of $24 per share with 0.5 million share outstanding. the company also has 4,000 bonds outstanding. The current price
xyz corp. has a stock price of $24 per share with 0.5 million share outstanding. the company also has 4,000 bonds outstanding. The current price for each bond is $1,500. XYZ's excess cash is zero. the company has an equity beta of 2 and a debt beta of 0.5. Assume that the risk-free interest rate is 2% and expected market risk premium is 6%. XYZ inc. faces a tax rate of 30%. Suppose its management is considering a project that has the same risk and same financing mix as the firm itself. Given the following expected free cash flows of the project, the project's NPV is $___million. Year ----0 ----------------------1 -------------------- 2 FCF- -245 million ----------- 156 million -------- 182 million
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