Question
Your company is considering a $1,000,000 capital project that will generate an after-tax cash flow of $250,000 for each year of the projects 7-year lifespan.
Your company is considering a $1,000,000 capital project that will generate an after-tax cash flow of $250,000 for each year of the projects 7-year lifespan. The weighted average cost of capital is 15%. The floatation cost for equity is 5% and for debt is 3%. The companys target D/E ratio is 0.6. Calculate the following returns:
(1/100 of one percent without % sign, e.g., 12.671, if a negative percentage, -9.56). For dollar amounts, record to the nearest dollar with no dollar sign, e.g., 45986, if negative, -45986).
1. Weighted average floatation cost (%):
2. True cost of the project ($):
3. NPV ($):
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