A company considers to undertake a 2yr project that requires an initial investment (at=0)of 1.5(allcash...
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A company considers to undertake a 2yr project that requires an initial investment (at=0)of 1.5(allcash flows in millon). Expected (after-tax)revenue are 0.25 in year 1(at= 1) and 1.6 in year two(at t=2).The company's cost of capital is 12%,and its cost of debt is 6%. The company is 50% equity financed.The risk-free rate is 4%. Assume that the project is a carbon copy of the form.
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