Torpedo Co. is considering a new project generating an annual cash revenue of $500,000 in perpetuity. Annual costs are 70 percent of the cash revenue. The initial cost of the investment is $685,000. The tax rate is 34 percent and the unlevered cost of equity is 14.2 percent. The firm is financing $300,000 of the project cost with debt. What is the adjusted present value of the project? O $182,183.10 O $114,183.10 O $148,183.10 O $80,183.10

Torpedo Co. is considering a new project generating an annual cash revenue of $500,000 in perpetuity. Annual costs are 70 percent of the cash revenue. The initial cost of the investment is $685,000. The tax rate is 34 percent and the unlevered cost of equity is 14.2 percent. The firm is financing $300,000 of the project cost with debt. What is the adjusted present value of the project? O $182,183.10 O $114,183.10 O $148,183.10 O $80,183.10

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section10.A: Mutually Exclusive Investments Having Unequal Lives

Problem 2P

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