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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 45% and its current WACC is 11.45%. 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 45%? Select One. Free Cash Flows for New Project (in $ million) Year 0 1 2 3 FCF (in $ millions) (250.00) 100.00 150.00 100.00 4 50.00 1. $141.81 million O II. $112.50 million III. $65.13 million O IV. $181.13 million O v. $29.31 million
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