Question: Alpha Industries is considering a project with an initial cost of $7.8 million. The project will produce cash inflows of $1.84 million per year for

Alpha Industries is considering a project with an initial cost of $7.8 million. The project will produce cash inflows of $1.84 million per year for 6 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.55 percent and a cost of equity of 11.23 percent. The debtequity ratio is .58 and the tax rate is 39 percent. What is the net present value of the project?

$528,375
$616,437
$641,095
$554,793
$418,544

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Alpha Industries is considering a project with an initial cost of $ 1 0 , 0 0 0 , 0 0 0 . The project will produce cash inflows of $ 1 , 6 0 0 , 0 0 0 per year for 9 years. The project has the same...

Alpha Industries is considering a project with an initial cost of $ 7 . 8 million. The project will produce cash inflows of $ 1 . 8 4 million per year for 6 years. The project has the same risk as...

Assignment Six Lesson 6 1. Dennis wants to determine if the discount rate really makes any difference in the net present value of a project. He feels that if a project is acceptable at one rate of...

QUESTION 11 A project has the following cash flows. What is the approximate payback period? Year Cash Flow 0 -$7.000 1 $2,700 2 $3,300 3 $2,500 O a. 1.50 b. 1.75 Oc 2.1 d. 2.4 QUESTION 12 I Am Having...

QUESTION 12 I Am Having Fun, Inc. is considering a project with an initial cost of $45.000. The project will produce cash inflows of $12,000 a year for 5 years. What is the payback period? a 2.45...

please solve on paper ... 3 Project (Individual) Question 1: Answer the following questions: ..(8 Marks) 1. Explain the difference between a bid price and an asked price and also explain why the...

Joe's Parlour is considering a project with an initial cost of $46,700. The project will produce cash inflows of $10,000 a year for the first two years and $11,829 a year for the following three...

List three substantive analytical procedures that the auditor might use in auditing the income statement.

A bond is maturing in 10.5 years and has a semiannually paid coupon of 4.3% per year and price 93-15+. a) Calculate its Yield to Maturity. Show your calculation or explain how you calculated the...

The sale of a unit of a firm to existing management is often achieved through a leveraged buyout. Question 6 options: TrueFalse

Vehicle part 3. This task has the following elements that are relevant to the learning outcomes of this module: - be able to define common behavior for objects using interface - be able to define...