What is the projected net present value of this


ABC firm has a capital structure which is based on 60% common stock, 10% preferred stock and 30% debt. The cost of common stock is 15%, the cost of preferred stock is 11% and the pre-tax cost of debt is 9.5%. The firm's tax rate is 35%. The firm is considering a project that is equally as risky as the firm's current operations. This project has initial costs of $300,000 and annual cash inflows of $80,000, $270,000, and $112,000 over the next three years, respectively. What is the projected net present value of this project?

Solution Preview :

Prepared by a verified Expert
Business Management: What is the projected net present value of this
Reference No:- TGS02765317

Now Priced at $10 (50% Discount)

Recommended (95%)

Rated (4.7/5)