Estefan Industries has a new project available that requires an initial investment of $4.9million. The project will provide unlevered cash flows of $842,000 per year for the next20 years. The company will finance the project with a debt-value ratio of .35. Thecompany's bonds have a YTM of 6.3 percent. The companies with operationscomparable to this project have unlevered betas of 1.22, 1.15, 1.37, and 1.32. The risk-freerate is 3.7 percent and the market risk premium is 6.9 percent. The tax rate is 22percent. What is the NPV of this project? (Do not round intermediate calculations andenter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g.,1,234,567.89)NPV

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Description: Estefan Industries has a new project available that requires an initial investment of $4.9million. The project will provide unlevered cash flows of $842,000 per year for the next20 years. The company will finance the project with a debt-value ratio

The net present value compares the present value of anticipated cash inflows and the expenditures to…

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percent. What is the NPV of this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89) NPV

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 27P

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