16. Taylor Technologies has a target capital structure that consists of 40% debt and 60% equity....

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16. Taylor Technologies has a target capital structure thatconsists of 40% debt and 60% equity. The equity will be financedwith retained earnings. The company’s bonds have a yield tomaturity of 10%. The company’s stock has a beta = 1.1. Therisk-free rate is 6%, the market risk premium is 5%, and the taxrate is 30%. The company is considering a project with thefollowing cash flows:

Project A
Year Cash Flow
0 -$50,000
1 35,000
2 43,000
3 60,000
4 -40,000

What is the project’s MIRR?

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1 calculation of costof capital COST OF DEBT KD YTM OF BOND 10 GIVENPOST TAX COST OF DEBTKD 1007 7COST OF See Answer

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16. Taylor Technologies has a target capital structure thatconsists of 40% debt and 60% equity. The equity will be financedwith retained earnings. The company’s bonds have a yield tomaturity of 10%. The company’s stock has a beta = 1.1. Therisk-free rate is 6%, the market risk premium is 5%, and the taxrate is 30%. The company is considering a project with thefollowing cash flows:Project AYear Cash Flow0 -$50,0001 35,0002 43,0003 60,0004 -40,000What is the project’s MIRR?