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Your company is considering a project that will cost $4 million. The project...

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Accounting

Your company is considering a project that will cost $4 million. The project will generate after-tax cash flows of $900,000 per year for 8 years. The firms WACC is 15% and the firms target D/E ratio is 1.3. The flotation cost for equity is 5% and the flotation cost for debt is 3%. What is the NPV for the project after adjusting for flotation costs?

What is the proportion of debt in the firms capital structure?

Multiple Choice

  • 46%

  • 56%

  • 62%

  • 65%

Answer & Explanation Solved by verified expert
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