Question
Your firm has an averagerisk project under consideration. You choose to fund the project in the same manner as the firm's existing capital structure. If
Your firm has an
averagerisk
project under consideration. You choose to fund the project in the same manner as the firm's existing capital structure. If the cost of debt is 10.00%, the cost of preferred stock is 13.00%, the cost of common stock is 16.00%, and the WACC adjusted for taxes is 13.00%, what is the NPV of the project, given the expected cash flows listed here?
| Category | T0 | T1 | T2 | T3 |
| Investment | $3,000,000 | |||
| NWC | $350,000 | $350,000 | ||
| Operating Cash Flow | $950,000 | $950,000 | $950,000 | |
| Salvage | $50,000 | |||
| Total Incremental Cash Flow | $3,350,000 | $950,000 | $950,000 | $1,350,000 |
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Real Estate Finance And Investments
Authors: William Brueggeman, Jeffrey Fisher
13th Edition
0073524719, 9780073524719
