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Your company is considering a project that will cost $4 million. The project will generate after-tax cash flows of $900,000 per year for 8 years.
Your company is considering a project that will cost $4 million. The project will generate after-tax cash flows of $900,000 per year for 8 years. The firms WACC is 15% and the firms target D/E ratio is 1.3. The flotation cost for equity is 5% and the flotation cost for debt is 3%. What is the NPV for the project after adjusting for flotation costs?
What is the weighted average flotation cost? (use Round function to 4 decimal places if using Excel)?
Multiple Choice
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2.79%
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4.56%
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5.85%
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3.87%
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