Question: Alpha Industries is considering a project with an initial cost of $8.1 million. The project will produce cash inflows of $1.46 million per year for

Alpha Industries is considering a project with an initial cost of $8.1 million. The project will produce cash inflows of $1.46 million per year for 9 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.64 percent and a cost of equity of 11.29 percent. The debtequity ratio is .61 and the tax rate is 39 percent. What is the net present value of the project?

Multiple Choice

  • $600,177

  • $937,917

  • $901,843

  • $811,659

  • $773,008

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