Calculate the net present value of the forecasted cash flows assuming an investment cost of $18,500,000 in

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Calculate the net present value of the forecasted cash flows assuming an investment cost of $18,500,000 in the beginning of 2021.

Estimate cost of capital using the following data:

Market value of debt - $600,000

Market value of equity - $1, 400,000

Current yield on debt - 7.3%

Tax rate - 35%

Expected market return - 12%

Current 10 year US Treasury - 3.8%

Beta - 2.1

State your opinion on whether you would make the investment and why?

Related Book For answer-question

Managerial Accounting for Managers

ISBN: 978-1259578540

4th edition

Authors: Eric Noreen, Peter Brewer, Ray Garrison

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Posted Date: Mar 02, 2023 06:10 AM

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Calculate the net present value of the forecasted cash flows assuming an investment cost of $18,500,000 in

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To calculate the net present value NPV of the forecasted cash flows we need to discount them using t... View the full answer

Managerial Accounting for Managers

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