Q5)Nvidia, Incorporated, is thinking about a project that is expected to result in initial after-tax cash savings of $1.78 million at the end of the first year, and these savings will grow at a rate of 2 percent per year indefinitely. The company has a target debt-equity ratio of .8, a cost of equity of 11.8 percent, and an after-tax cost of debt of 4.6 percent. The cost-saving proposal is somewhat riskier than the usual projects the firm undertakes; management uses the subjective approach and applies an adjustment factor of +3 percent to the cost of capital for such risky projects. Should the project be undertaken if the cost is found to be $18,500,000.

Group of answer choices

Yes

No

Cannot be determined