Business
Business, 21.04.2021 01:00, Emorej22

Hankins, Inc., is considering a project that will result in initial aftertax cash savings of $6.3 million at the end of the first year, and these savings will grow at a rate of 3 percent per year indefinitely. The firm has a target debt-equity ratio of .62, a cost of equity of 13.2 percent, and an aftertax cost of debt of 5.7 percent. The cost-saving proposal is somewhat riskier than the usual project the firm undertakes; management uses the subjective approach and applies an adjustment factor of 2 percent to the cost of capital for such risky projects. a. Calculate the required return for the project. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)b. What is the maximum cost the company would be willing to pay for this project

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