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Alpha Industries is considering a project with an initial cost of $8.2 million. The project will produce cash inflows of $1.93 million per year for 6 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.67 percent and a cost of equity of 11.31 percent. The debt-equity ratio is .62 and the tax rate is 40 percent. What is the net present value of the project? Multiple Choice $581,350 $553,667 $645,945 $671,783 $418,860

Alpha Industries is considering a project with an initial cost of $8.2 million. The project will produce cash inflows of $1.93 million per year for 6 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.67 percent and a cost of equity of 11.31 percent. The debt-equity ratio is .62 and the tax rate is 40 percent. What is the net present value of the project? Multiple Choice $581,350 $553,667 $645,945 $671,783 $418,860

Essentials Of Investments
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
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Alpha Industries is considering a project with an initial cost of $8.2 million. The project will produce cash inflows of $1.93 million per year for 6 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.67 percent and a cost of equity of 11.31 percent. The debt-equity ratio is .62 and the tax rate is 40 percent. What is the net present value of the project? Multiple Choice O $581,350 $553,667 $645,945 $671,783 $418,860
Transcribed Image Text:Alpha Industries is considering a project with an initial cost of $8.2 million. The project will produce cash inflows of $1.93 million per year for 6 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.67 percent and a cost of equity of 11.31 percent. The debt-equity ratio is .62 and the tax rate is 40 percent. What is the net present value of the project? Multiple Choice O $581,350 $553,667 $645,945 $671,783 $418,860
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