Question: Please use the information below to solve the next question. Deviant company is evaluating a short term project that requires a $860,000 investment. The anticipated
Please use the information below to solve the next question.
Deviant company is evaluating a short term project that requires a $860,000 investment. The anticipated cash flows are $200,000 in first year ,$250,000 for second year, no cash flow for third year, $400 000 in fourth and $350,000 in fifth year. There is a no salvage value for this project. Deviant company currently has a 60% debt and 40% equity structure. Their most recent $1000 face value bond is selling for $900. This bond has a coupon rate of 10% which are paid yearly and 10 years maturity. Deviant use CAPM model to calculate its return of 11%. The applicable corporate tax rate for deviant is 20%
1. What is the approximate cost of debt for deviant company after taxes
2. What is the cost of equity for deviant company
3 what is the WACC for deviant company ?
4. What is the approximate NPV of this project for deviant company
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