Question: Alpha Industries is considering a project with an initial cost of $9.3 million. The project will produce cash inflows of $1.64 million per year for

Alpha Industries is considering a project with an initial cost of $9.3 million. The project will produce cash inflows of $1.64 million per year for 9 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 6.00 percent and a cost of equity of 11.53 percent. The debtequity ratio is .73 and the tax rate is 39 percent. What is the net present value of the project?

Multiple Choice

  • $890,653

  • $770,757

  • $454,134

  • $856,397

  • $734,054

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