Based on market values, Gubler's Gym has an equity multiplier of 168 times. Shareholders require a return of 11.79 percent on the company's stock and a pretax return of 5.06 percent on the company's debt. The company is evaluating a new project that has the same risk as the company itself. The propect will generate annual aftertax cash flows of $321,000 per year for 9 years. The tax rate is 21 percent. What is the most the company would be willing to spend today on the project? Multiple Choice $1,802.338 $1,953,295 $1,919,325 $1,864,487 $2,264,479
Based on market values, Gubler's Gym has an equity multiplier of 168 times. Shareholders require a return of 11.79 percent on the company's stock and a pretax return of 5.06 percent on the company's debt. The company is evaluating a new project that has the same risk as the company itself. The propect will generate annual aftertax cash flows of $321,000 per year for 9 years. The tax rate is 21 percent. What is the most the company would be willing to spend today on the project? Multiple Choice $1,802.338 $1,953,295 $1,919,325 $1,864,487 $2,264,479
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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