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3 points She Blue Cod, Inc. a private firm in the holiday gift industry, is...

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Accounting

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3 points She Blue Cod, Inc. a private firm in the holiday gift industry, is considering a new project. The company currently has a target debl-equity ratio of 35, but the industry target debt-equity ratio is 30. The industry average beta is 1.50. The market risk premium is 8 percent, and the risk free rate is 6 percent. Assume all companies in this industry can issue debt at the risk free rate. The corporate tax rate is 40 percent. The project requires an initial outlay of $690,000 and is expected to result in an after-tax EBIT of $110,006 at the end of the first year. The project will be financed at the company's target debt-equity ratio Annual cash flows from the project will grow at a constant rate of 7 percent until the end of the fifth year and remain constant forever thereafter. What is the NPV of this project? (Keep at least 3 decimal places in intermediate steps. Choose an answer that is closest to yours $211,2648 5263.770.1 $291,0285 5237.186.1

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