Dyrdek Enterprises has a market capitalization of $11.6 million in equity and $3.95 million in debt. The company is considering a new project that carries more risk than the firm. As a result, the company will apply a 2.2 percent risk correction factor. The new project will cost $2.36 million today and generate an annual cash flow of $616,000 for the next 6 years. The company's cost of equity is 11.39 percent and the pre-tax cost of debt is 4.96 percent. The tax rate is 39 percent. What is the NPV of the project?

Answer rating: 100% (QA)

Market value of equity 11600000 Market value of debt 3950000 To... View the full answer