Question: 6. Och Inc. is considering a project that will result in after-tax cash saving of $3.5 million per year indefinitely. The firm has a target
6. Och Inc. is considering a project that will result in after-tax cash saving of $3.5 million per year indefinitely. The firm has a target debt-equity ratio of 0.65, a cost of equity of 14%, and an after-tax cost of debt of 5.5%. The cost saving proposal is somewhat riskier than the usual project the firm undertakes, management uses the subjective approach and applies an adjustment factor of 2%. The company's wished average cost of capital (before adjustment) should be (54) In percentage, two decimal places). The project should only be undertaken if its cost is less than (55) _ (in S, two decimal places)
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