Question: i already submitted once, please work the exact problem. Deep Mines has 14 million shares of common stock outstanding with a beta of 1.67 and

i already submitted once, please work the exact problem.
i already submitted once, please work the exact problem. Deep Mines has

Deep Mines has 14 million shares of common stock outstanding with a beta of 1.67 and a market price of $42 a share. There are 900,000 shares of 9% preferred stock outstanding valued at $80 a share. The 10% semiannual bonds have a face value of $1,000 and are selling at, 91% of par. There are 220,000 bonds outstanding that mature in 17 years. The market risk premium is 11.5%, T-bills are yielding 7.5%, and the firm's tax rate is 32%. Management is considering a project that will produce a cash inflow of $54,000 per year forever. What is the maximum amount the firm can initially invest in this project to avoid a negative net present value for the project? Round to the nearest dollar

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!