Homework Help is Here – Start Your Trial Now!
Business
Accounting
A firm has a target debt equity ratio of 0.9 The cost of debt is 75% and the cost of equity is 14.5%. The company has a 34% tax rate. A project has an initial cost of $60.000 and an annual after tax cash flow of $13,000 for 6 years. There is no salvage value or net working capital requirement What is the net present value of the project using the WACC? NOTE: Keep at least 4 decimal places for INTERMEDIATE CALCULATIONS Enter your FINAL ANSWER to TWO decimal places Do NOT include a $ sign

A firm has a target debt equity ratio of 0.9 The cost of debt is 75% and the cost of equity is 14.5%. The company has a 34% tax rate. A project has an initial cost of $60.000 and an annual after tax cash flow of $13,000 for 6 years. There is no salvage value or net working capital requirement What is the net present value of the project using the WACC? NOTE: Keep at least 4 decimal places for INTERMEDIATE CALCULATIONS Enter your FINAL ANSWER to TWO decimal places Do NOT include a $ sign

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

3

A firm has a target debt equity ratio of 0.9 The cost of debt is 75% and the cost of equity is 14.5%. The company has a 34% tax rate. A project has an initial cost of $60.000 and an annual after-tax cash flow of $19,000 for 6 years. There is no salvage value or net working capital requirement. What is the net present value of the project using the WACC? NOTE: Keep at least 4 decimal places for INTERMEDIATE CALCULATIONS. Enter your FINAL ANSWER to TWO decimal places. Do NOT include a $ sign
Transcribed Image Text:A firm has a target debt equity ratio of 0.9 The cost of debt is 75% and the cost of equity is 14.5%. The company has a 34% tax rate. A project has an initial cost of $60.000 and an annual after-tax cash flow of $19,000 for 6 years. There is no salvage value or net working capital requirement. What is the net present value of the project using the WACC? NOTE: Keep at least 4 decimal places for INTERMEDIATE CALCULATIONS. Enter your FINAL ANSWER to TWO decimal places. Do NOT include a $ sign
Expert Solution
steps

Step by step

Solved in 4 steps with 1 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS