GoodFish Corporation is considering a new project with a four-year useful life. The initial investment on this project is $1,200,000 immediately. The future cash flows associated with this project are $650,000, $650,000, $650,000, and $856,000 in years 1, 2, 3 and 4, respectively. GoodFish has a target debt–equity ratio of 3, a cost of equity of 10 percent, and a pretax cost of debt of 8 percent. The tax rate is 25%. What is the NPV of this project? A. $1,158,843.73 B. $1,077,782.13 C. $905,193.80 D. $1,051,753.51
GoodFish Corporation is considering a new project with a four-year useful life. The initial investment on this project is $1,200,000 immediately. The future cash flows associated with this project are $650,000, $650,000, $650,000, and $856,000 in years 1, 2, 3 and 4, respectively. GoodFish has a target debt–equity ratio of 3, a cost of equity of 10 percent, and a pretax cost of debt of 8 percent. The tax rate is 25%. What is the NPV of this project? A. $1,158,843.73 B. $1,077,782.13 C. $905,193.80 D. $1,051,753.51
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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GoodFish Corporation is considering a new project with a four-year useful life. The initial investment on this project is $1,200,000 immediately. The future cash flows associated with this project are $650,000, $650,000, $650,000, and $856,000 in years 1, 2, 3 and 4, respectively. GoodFish has a target debt–equity ratio of 3, a
A. |
$1,158,843.73 |
|
B. |
$1,077,782.13 |
|
C. |
$905,193.80 |
|
D. |
$1,051,753.51 |
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