Alpha Industries is considering a project with an initial cost of $8.1 million. The project will produce cash inflows of $1.46 million per year for 9 years.The project has the same risk as the firm. The firm has a pretax cost of debt of 5.64 percent and a cost of equity of 11.29 percent. The debt-equityratio is .61 and the tax rate is 39 percent. What is the net present value of the project?Multiple ChoiceOOO$811,659$600,177$937,917$901,843 If the economy booms, RTF, Inc., stock is expected to return 12 percent. If the economy goes into a recessionary period, then RTF is expected toonly return 5 percent. The probability of a boom is 79 percent while the probability of a recession is 21 percent. What is the variance of the returnson RTF, Inc., stock?Multiple ChoiceOO.052650.000642.000813.028512

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Alpha Industries is considering a project with an initial cost of $8.1 million. The project will produce cash inflows of $1.46 million per year for 9 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.64 percent and a cost of equity of 11.29 percent. The debt-equity ratio is .61 and the tax rate is 39 percent. What is the net present value of the project?

Alpha Industries is considering a project with an initial cost of $8.1 million. The project will produce cash inflows of $1.46 million per year for 9 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.64 percent and a cost of equity of 11.29 percent. The debt-equity ratio is .61 and the tax rate is 39 percent. What is the net present value of the project?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 14P

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