Question: Company A is considering a project that will cost $60 million and have a year-end after-tax cash flow of $5 million in perpetuity. The before

Company A is considering a project that will cost $60 million and have a year-end after-tax cash flow of $5 million in perpetuity. The before tax cost of debt is 8% and its unlevered cost of equity is 10%. The project has risk similar to that of the operation of the firm, and the target debt-equity ratio is 1.2. What is the NPV for the project if the tax rate is 35%?

A. $3,533,581.43

B. -$16,747,404.84

C. $1,804,697.16

D. $7,750,677.51

E. $7,732,359.21

The correct answer is letter C but I keep getting letter D.

Please show a step-by-step explanation to the calculation.

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