Business, 17.04.2021 23:00, adrian128383
National Electric Company (NEC) is considering a $45.08 million project in its power systems division. Tom Edison, the company’s chief financial officer, has evaluated the project and determined that the project’s unlevered cash flows will be $3.18 million per year in perpetuity. Mr. Edison has devised two possibilities for raising the initial investment: Issuing 10-year bonds or issuing common stock. The company’s pretax cost of debt is 7.7 percent, and its cost of equity is 11.6 percent. The company’s target debt-to-value ratio is 80 percent. The project has the same risk as the company’s existing businesses, and it will support the same amount of debt. The tax rate is 34 percent.
1. Calculate the weighted average cost of capital. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e. g., 32.16))
Weighted average cost of capital %
2. Calculate the net present value of the project. (Enter your answer in dollars, not millions of dollars, i. e. 1,234,567. Do not round intermediate calculations and round your final answer to 2 decimal places. (e. g., 32.16))
Net present value $
3. Should NEC accept the project?
a. No
b. Yes
Answers: 3
Business, 22.06.2019 07:30, maskythegamer
Why has the free enterprise system been modified to include some government intervention?
Answers: 1
Business, 22.06.2019 09:50, shanedawson19
Is exploiting a distinctive competence or improving efficiency for competitive advantage. (a) cooptation (b) coalition (c) competitive intelligence (d) competitive aggression (e) smoothing
Answers: 1
Business, 22.06.2019 19:50, wsdafvbhjkl
On july 7, you purchased 500 shares of wagoneer, inc. stock for $21 a share. on august 1, you sold 200 shares of this stock for $28 a share. you sold an additional 100 shares on august 17 at a price of $25 a share. the company declared a $0.95 per share dividend on august 4 to holders of record as of wednesday, august 15. this dividend is payable on september 1. how much dividend income will you receive on september 1 as a result of your ownership of wagoneer stock
Answers: 1
National Electric Company (NEC) is considering a $45.08 million project in its power systems divisio...
Biology, 08.05.2021 05:40
Mathematics, 08.05.2021 05:40
Mathematics, 08.05.2021 05:40
Mathematics, 08.05.2021 05:40
Chemistry, 08.05.2021 05:40
History, 08.05.2021 05:40
Arts, 08.05.2021 05:40