A firm is proposing to undertake a scale expansion. It would cost $25 million and produce an
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A firm is proposing to undertake a scale expansion. It would cost $25 million and produce an expected cash flow of $5 million a year in perpetuity before it is taxed at the corporate rate of 34%. The firm is financed 30% by debt. The expected return on the firm's equity is 20% and the interest rate on its debt is 10%. What is the NPV of the project using the weighted average cost of capital?
Related Book For
Entrepreneurial Finance
ISBN: 978-0538478151
4th edition
Authors: J . chris leach, Ronald w. melicher
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