Harris Inc. is a book publisher that is considering developing an e - reader. The project requires 270 ($ thousand) in capital expenditures upfront. The production will continue for two years, and the FCFs in years 1 and 2 are 150 and 170 (in $ thousand). The tax rate is 50%. The asset cost of capital for the book publishing industry is 8%. Harris's cost of debt is 6% Turbo Inc. is a public firm that sells e - readers. It has a debt to value ratio 1/2 Its equity cost of capital is 22% and its debt cost of capital is 4% (a) What is the NPV of the project if it is entirely financed with equity (in $ thousand)? enter your response here (Round to two decimal places.) (b) What is the NPV of the project if Harris maintains a fixed D / E ratio of 1/1 and finances the project with this D / E ratio (in $ thousand)? your response here enter (Round to two decimal places.

Harris Inc. is a book publisher that is considering developing an e - reader. The project requires 270 ($ thousand) in capital expenditures upfront. The production will continue for two years, and the FCFs in years 1 and 2 are 150 and 170 (in $ thousand). The tax rate is 50%. The asset cost of capital for the book publishing industry is 8%. Harris's cost of debt is 6% Turbo Inc. is a public firm that sells e - readers. It has a debt to value ratio 1/2 Its equity cost of capital is 22% and its debt cost of capital is 4% (a) What is the NPV of the project if it is entirely financed with equity (in $ thousand)? enter your response here (Round to two decimal places.) (b) What is the NPV of the project if Harris maintains a fixed D / E ratio of 1/1 and finances the project with this D / E ratio (in $ thousand)? your response here enter (Round to two decimal places.

Name: Harris Inc. is a book publisher that is considering developing an e -
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Description: Harris Inc. is a book publisher that is considering developing an e - reader. The project requires 270 ($ thousand) in capital expenditures upfront. The production will continue for two years, and the FCFs in years 1 and 2 are 150 and 170 (in $ thous

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter11: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 1P: Talbot Industries is considering launching a new product. The new manufacturing equipment will cost...

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Harris Inc. is a book publisher that is considering developing an e-reader. The project requires 270 ($ thousand) in capital expenditures upfront. The production will continue for two years, and the FCFs in years 1 and 2 are 150 and 170 (in $ thousand). The tax rate is 50%. The asset cost of capital for the book publishing industry is 8%. Harris’s cost of debt is 6%. Turbo Inc. is a public firm that sells e-readers. It has a debt-to-value ratio 1/2. Its equity cost of capital is 22% and its debt cost of capital is 4%. (a) What is the NPV of the project if it is entirely financed with equity (in $ thousand)?(Round to two decimal places.) (b) What is the NPV of the project if Harris maintains a fixed D/E ratio of 1/1 and finances the project with this D/E ratio (in $ thousand)?(Round to two decimal places.)
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