Fitzgerald Industries has a new project available that requires an initial investment of $4.7 million. The...
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Fitzgerald Industries has a new project available that requires an initial investment of $4.7 million. The project will provide unlevered cash flows of $845,000 per year for the next 20 years. The company will finance the project with a debt-value ratio of .3. The company's bonds have a YTM of 6.6 percent. The companies with operations comparable to this project have unlevered betas of 1.14, 1.07, 1.29, and 1.24. The risk-free rate is 4 percent and the market risk premium is 6.8 percent. The tax rate is 25 percent. What is the NPV of this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89) NPV Fitzgerald Industries has a new project available that requires an initial investment of $4.7 million. The project will provide unlevered cash flows of $845,000 per year for the next 20 years. The company will finance the project with a debt-value ratio of .3. The company's bonds have a YTM of 6.6 percent. The companies with operations comparable to this project have unlevered betas of 1.14, 1.07, 1.29, and 1.24. The risk-free rate is 4 percent and the market risk premium is 6.8 percent. The tax rate is 25 percent. What is the NPV of this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89) NPV
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To calculate the NPV Net Present Value of the project we need to discount the unlevered cash flows a... View the full answer
Related Book For
Corporate Finance
ISBN: 978-0077861759
10th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Posted Date:
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