Question: Gym Co. is analyzing a project with an initial cost of $135,000 and cash Inflows of $74,000 in Year 1 and $86,000 in Year 2.
Gym Co. is analyzing a project with an initial cost of $135,000 and cash Inflows of $74,000 in Year 1 and $86,000 in Year 2. This project is an extension of current operations and thus is equally as risky as the current company. The company uses only debt and common stock to finance its operations and maintains 28.05% debt and equity of 71.95%. The after-tax cost of debt is 5.1 percent, the cost of equity is 13.2 percent. What is the projected net present value of this project? Hint first determine the weighted Average Cost of Capital (WACC) and use this answer as l" wijen calculating NPV using CF on your financial calculator $411 $1,600 -$1,807 5938 -$2.400
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