Question: Consider the project described in Problem 6 Assume that the

Consider the project described in Problem 6. Assume that the firm plans to finance 40% of its net capital expenditure and working capital needs with debt.
a. Estimate the cash flow to equity for each of the four years.
b. Estimate the payback period for equity investors in the firm.
c. Estimate the NPV to equity investors if the cost of equity is 16%. Would you accept the project?
d. Estimate the IRR to equity investors in the firm. Would you accept the project?

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  • CreatedApril 15, 2015
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