Dorman Industries has a new project available that requires an initial investment of $6.5 million. The...

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Dorman Industries has a new project available that requires aninitial investment of $6.5 million. The project will provideunlevered cash flows of $875,000 per year for the next 20 years.The company will finance the project with a debt-to-value ratio of.4. The company’s bonds have a YTM of 5.9 percent. The companieswith operations comparable to this project have unlevered betas of1.35, 1.28, 1.50, and 1.45. The risk-free rate is 2.9 percent, andthe market risk premium is 6.1 percent. The company has a tax rateof 34 percent.
What is the NPV of this project?

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Dorman Industries has a new project available that requires aninitial investment of $6.5 million. The project will provideunlevered cash flows of $875,000 per year for the next 20 years.The company will finance the project with a debt-to-value ratio of.4. The company’s bonds have a YTM of 5.9 percent. The companieswith operations comparable to this project have unlevered betas of1.35, 1.28, 1.50, and 1.45. The risk-free rate is 2.9 percent, andthe market risk premium is 6.1 percent. The company has a tax rateof 34 percent.What is the NPV of this project?