Dyrdek Enterprises has equity with a market value of $1.8 million and the market value of debt is $3.55 million. The company is evaluating a new project that has more risk than the firm. As a result, the company will apply a risk adjustment factor of 1.6 percent. The new project will cost $2.20 million today and provide annual cash flows of $576,000 for the next 6 years. The company's cost of equity is 11.07 percent and the pretax cost of debt is 4.88 percent. The tax rate is 21 percent. What is the project's NPV?
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Dyrdek Enterprises has equity with a market value of $1.8 million and the market value of debt is $3.55 million. The company is evaluating a new project that has more risk than the firm. As a result, the company will apply a risk adjustment factor of 1.6 percent. The new project will cost $2.20 million today and provide annual cash flows of $576,000 for the next 6 years. The company's
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- Dyrdek Enterprises has equity with a market value of $10.4 million and the market value of debt is $3.35 million. The company is evaluating a new project that has more risk than the firm. As a result, the company will apply a risk adjustment factor of 1.2 percent. The new project will cost $2.12 million today and provide annual cash flows of $556,000 for the next 6 years. The company's cost of equity is 10.91 percent and the pretax cost of debt is 4.84 percent. The tax rate is 39 percent. What is the project's NPV?Dyrdek Enterprises has equity with a market value of $12.6 million and the market value of debt is $4.45 million. The company is evaluating a new project that has more risk than the firm. As a result, the company will apply a risk adjustment factor of 1.9 percent. The new project will cost $2.56 million today and provide annual cash flows of $666,000 for the next 6 years. The company's cost of equity is 11.79 percent and the pretax cost of debt is 5.06 percent. The tax rate is 24 percent. What is the project's NPV? Multiple Choice $208,195 $194,561 $536,049 $183,363 $364,858Dyrdek Enterprises has equity with a market value of $12.2 million and the market value of debt is $4.25 million. The company is evaluating a new project that has more risk than the firm. As a result, the company will apply a risk adjustment factor of 1.6 percent. The new project will cost $2.48 million today and provide annual cash flows of $646,000 for the next 6 years. The company's cost of equity is 11.63 percent and the pretax cost of debt is 5.02 percent. The tax rate is 25 percent. What is the project's NPV? a. $212,299 b. $506,561 c. $204,036 d. $366,955 e. $237,409
- Alpha Industries is considering a project with an initial cost of $8.1 million. The project will produce cash inflows of $1.46 million 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 percent and a cost of equity of 11.29 percent. The debtequity ratio is .61 and the tax rate is 39 percent. What is the net present value of the project?Dyrdek Enterprises has equity with a market value of $11.8 million and the market value of debt is $4.05million. The company is evaluating a new project thathas more risk than the firm. As a result, the companywill apply a risk adjustment factor of 2.1 percent. Thenew project will cost $2.40 million today and provideannual cash flows of $626, 000 for the next 6 years. Thecompany's cost of equity is 11.47 percent and thepretax cost of debt is 4.98 percent. The tax rate is 21percent. What is the project's NPV?The new firm is planning a project with an initial cost of $50,000. This project will produce a cash inflows of $20,000 at the end of the 1st year and $10,000 at the end of each of following four years. This project has the same risk as the company. This new company has a cost of levered equity of 8% and a pretax cost of debt of 9%. The tax rate is 30% and the debt ratio is 0.40. What is the net present value of this project?
- Alpha Industries is considering a project with an initial cost of $8.4 million. The project will produce cash inflows of $1.56 million per year for 8 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.49 percent and a cost of equity of 11.19 percent. The debt - equity ratio is .56 and the tax rate is 23 percent. What is the net present value of the project?Alpha Industries is considering a project with an initial cost of $8.3 million. The project will produce cash inflows of $1.73 million per year for 7 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.70 percent and a cost of equity of 11.33 percent. The debt–equity ratio is .63 and the tax rate is 35 percent. What is the net present value of the project?. Please correct.A start-up company Amazonian.com is considering expanding into new product markets. The expansion will require an initial investment of $160 million and is expected to generate perpetual EBIT of $40 million per year. After the initial investment, future capital expenditures are expected to equal depreciation, and no further additions to net working capital is anticipated. Amazonian.com’s existing capital structure is composed of equity with a market value of $500 million and debt with a market value of $300 million, and has 10 million shares outstanding. The unlevered cost of capital for Amazonian.com is 10%, and Amazonian.com’s debt is risk free with an interest of 4%. The expansion into the new product market will have the same business risk as Amazonian.com’s existing assets. The corporate tax rate is 35%, there are no personal taxes or costs of financial distress. a) Amazonian.com initially proposes to fund the expansion by issuing equity. If investors were not expecting this…
- DavidLee Corporation has $50 million in debt and $60 million in equity. The interest rate on the debt is 12% and a beta is 1.25. The corporate tax rate is 35% and the market risk premium is 6%, and the current t-bill rate is 4.5%. This firm is now to consider a $6.5 million investment project. Cash flow is expected to be about $665,000 per year for a fairly long period of time. Determine if this project is worthwhile to proceedA new firm considering a project with an initial cost of $27,000. The project will produce a cash inflows of $16,000 at the end of the first year and $5,000 at the end of each of the following three years. The project has the same risk as the firm. The firm has a pretax cost of debt of 6% and a cost of levered equity of 10%. The debt-equity ratio is 0.36 and the tax rate is 20%. What is the net present value of the project?Jenkins Corporation is investing in a new piece of equipment at a cost of $6 million. The project is expected to generate annual cash flows of $1,850,000 over the next six years. The firm's cost of capital is 20 percent. What is the project's Profitability Index (PI)? (Do not round intermediate computations, but round final answer to the nearest dollar.) O 1.025 O 1.250 .9746 O 1.445