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You are a financial manager at ABC Corp. and are trying to assess the following project. The project will require a $250 million initial investment
You are a financial manager at ABC Corp. and are trying to assess the following project. The project will require a $250 million initial investment and will generate free cash flows in years 1-4 as shown in the table below. ABC Corp maintains a constant debt-to-enterprise value ratio of 10% and its current WACC is 9.8%. Assuming that ABC Corp. takes the project, how much additional debt must the firm issue in order to maintain a constant debt-to-enterprise value ratio of 10%? Select One. Free Cash Flows for New Project (in $ million) Year 0 1 23 FCF (in 9 millions) (250.00) 100.00 150.00 100.00 50.00 OI. $75.44 million O II. $32.54 million O III. $2.5 million O IV. $25 million O V. $7.54 million
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