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Your firm is going to seek outside financing to fund the $2.0 million necessary to build an additional production line. You anticipate flotation costs of

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Your firm is going to seek outside financing to fund the $2.0 million necessary to build an additional production line. You anticipate flotation costs of 16% on any new equity issued and 6% on any new debt issued. Your firm's target capital structure is 35% debt and 65% equity and the WACC is 12%. If the production line is expected to yield after-tax cash flows of $800,000 each year for the next 5 years, should you undertake the investment? Yes, NPV of $602,304 Yes, NPV of $574,402 Yes, NPV of $598,107 No, NPV of ($5,399)

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