Question: FJ LLC is considering a project requiring an initial investment of $ 7 5 million and which expects $ 7 million in annual free cash

FJ LLC is considering a project requiring an initial investment of $75 million and which expects $7 million in annual free cash flows starting from next year till forever. The firm continuously rebalances its cap structure as well it maintains a target debt-to-equity (D/E) ratio of 1. FJ LLC corporate tax rate is 30%. Its pre-tax cost of debt is 4.5% and its cost of equity is 11%. What is the payback period of this? WAAC? Use Capital budgeting analysis to determine if FJ LLC should do the project?

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