Question: Alpha Industries is considering a project with an initial cost of $8.2 million. The project will produce cash inflows of $1.93 million per year for

Alpha Industries is considering a project with an initial cost of $8.2 million. The project will produce cash inflows of $1.93 million per year for 6 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.67 percent and a cost of equity of 11.31 percent. The debtequity ratio is .62 and the tax rate is 40 percent. What is the net present value of the project?

Multiple Choice

  • $581,350

  • $418,860

  • $645,945

  • $671,783

  • $553,667

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