An all-equity firm is considering a $2 million project. The project is expected to generate earnings before
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An all-equity firm is considering a $2 million project. The project is expected to generate earnings before taxes of $400,000 per year for ten years. To fully finance the project, the firm can obtain a twelve-year, non-amortized loan with an annual interest rate of 8.8 percent. The firm's cost of unlevered equity is 10.8 percent and it faces a tax rate of 20 percent. Using the adjusted present value approach, calculate the APV of the project.
Related Book For
Engineering Economy
ISBN: 978-0133439274
16th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
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