Question: Alpha Industries is considering a project with an initial cost of 6.9 million. The Project will produce cash flows of $1.52 million a year for

Alpha Industries is considering a project with an initial cost of 6.9 million. The Project will produce cash flows of $1.52 million a year for seven years. The firm uses the subjective approach to assign discount rates to projects. For this project, the subjective adjustment is +2.2percent (i.e. the projects discount rate is 2.2% higher than the firms discount rate). The firm has a pretax cost of debt of 9.1 percent and a cost of equity of 17.7 percent. The debt-equity ratio is .57 and the tax rate is 34 percent. What is the net present value of the project? Show your calculations (Round the answer to the nearest $100).

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