Problem 18-7 NPV for an All-Equity Company Jiminez, Incorporated, is an all-equity firm. The cost of the company's equity is currently 11.5 percent and the risk-free rate is 4.4 percent. The company is currently considering a project that will cost $11.94 million and last six years. The company uses straight-line depreciation. The project will generate revenues minus expenses each year in the amount of $3.55 million. If the company has a tax rate of 23 percent, what is the net present value of the project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89) Net present $ 6,886,082.02 value

B V @7% b. 8% c. 9% d. 10% T O 10. Wetzlar Mining Company is considering an iron ore extraction project which requires an initial investment of SAR 6,340,000 and will yield annual cash flows of SAR 1,546,267 for 5 years. The company's hurdle rate is 9%. Calculate IRR.

Problem 13-22 Flotation Costs and NPV Landman Corporation (LC) manufactures time series photographic equipment. It is currently at its target debt-equity ratio of 75. It's considering building a new $57 million manufacturing facility. This new plant is expected to generate aftertax cash flows of $6.9 million in perpetuity. The company raises all equity from outside financing. There are three financing options: 1. A new issue of common stock. The flotation costs of the new common stock would be 8.7 percent of the amount raised. The required return on the company's new equity is 15 percent. 2. A new issue of 20-year bonds: The flotation costs of the new bonds would be 3.7 percent of the proceeds. If the company issues these new bonds at an annual coupon rate of 5.8 percent, they will sell at par. 3. Increased use of accounts payable financing. Because this financing is part of the company's ongoing daily business, it has no flotation costs and the company assigns it a cost that is the…

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