You are the financial manager of Fencing Equipment Inc. and you are considering a $2M investment in the adhesives industry. You expect after-tax cash flows of $400,000 in perpetuity. The project is financed with a debt-to-equity ratio of 1:2. The beta of the firm’s debt is 0, the risk-free rate is 3%, and the market return is 10%. Also, you see three competitors in the adhesives industry with unlevered (as if the competitors do not have any debt) asset betas of 1.1, 1.2, and 1.3. The corporate tax rate is 21%. 

What is the NPV of this project? Enter your answer in dollars with 2 decimals.

Answer rating: 100% (QA)

Adhesives Industry Investment Analysis Based on the information you provided heres an analysis of the potential 2 million investment in the adhesives ... View the full answer