Regal Industries has the following capital structure. Its corporate tax rate is 35%. Security Book...
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Accounting
Regal Industries has the following capital structure. Its corporate tax rate is 35%.
Security Book Value Market Value Weight Cost
Debt $18 million $20 million 6%
Common stock $27 million 50 million 14%
A. Compute WACC = = .. %
B. Regal is evaluating a project costing $48,000 which will generate $10,000 for 6 years. It will require an increase of $2,000 in NWC at the outset, but no recapture. Should Regal accept the project?
NPV = $ Accept? .
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