Question: Alpha Industries is considering a project with an initial cost of $7.5 million. The project will produce cash inflows of $1.55 million per year for

Alpha Industries is considering a project with an initial cost of $7.5 million. The project will produce cash inflows of $1.55 million per year for 7 vears. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.46 percent and a cost of equity of 11.17 percent.

The debt- equity ratio is 55 and the tax rate is 21 percent. What is the net present value of the project?

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8 00-29-33

Multiple Choice

$370.395

$417,430

$482,364

$397 552

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