Worldwide Trousers is considering producing a new line of jean shorts. They estimate that setting...
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Finance
Worldwide Trousers is considering producing a new line of jean shorts. They estimate that
setting up production will cost $120,000, and they will receive EBIT of $80,000 one year from
today, $90,000 two years from today, and $60,000 three years from today. Using the FTE
method, what is this project worth if they borrow $90,000 at 8% for three years to finance this
project, their levered cost of equity is 19%, and their tax rate is 38%?
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