Alpha Industries is considering a project with an initial cost of $8.1 million. The project will produce cash inflows of $1.46million per year for 9 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.64 percentand a cost of equity of 11.29 percent. The debtequity ratio is .61 and the tax rate is 39 percent. What is the net presentvalue of the project?

Step 1: Given Value for Calculation Initial Cost = i = $8.1 millionCash Flow = cf = $1.46…

Answered: Alpha Industries is considering a…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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