Question

Alpha Industries is considering a project with an initial cost of $9.4 million. The project will produce cash inflows of $2.14 million per year for 6 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 6.03 percent and a cost of equity of 11.55 percent. The debt-equity ratio is .74 and the tax rate is 21 percent. What is the net present value of the project? Multiple Choice $457,785 $296,838 $142,207 $377,296 $396,160

Name: alpha industries is considering a project with an initial cost of 94 million the project will produce cash inflows of 214 million per year for 6 years the project has the same risk as the fi 76521
Uploaded: 2022-12-15T03:18:15-08:00
Duration: 2 min 58 s
Channel: Sanchit Jain
Description: alpha industries is considering a project with an initial cost of 94 million the project will produce cash inflows of 214 million per year for 6 years the project has the same risk as the fi 76521

          Alpha Industries is considering a project with an initial cost of $9.4 million. The project will produce cash inflows of $2.14 million per year for 6 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 6.03 percent and a cost of equity of 11.55 percent. The debt-equity ratio is .74 and the tax rate is 21 percent. What is the net present value of the project?

Multiple Choice

$457,785

$296,838

$142,207

$377,296

$396,160

alpha industries is considering a project with an initial cost of 94 million the project will produce cash inflows of 214 million per year for 6 years the project has the same risk as the fi 76521

Added by David B.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Sanchit Jain

12/15/2022

Step 1

4 million Annual cash inflows (CF) = $2.14 million per year Project duration (n) = 6 years Pretax cost of debt ($r_d$) = 6.03% = 0.0603 Cost of equity ($r_e$) = 11.55% = 0.1155 Debt-equity ratio (D/E) = 0.74 Tax rate (T) = 21% = 0.21 Show more…

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Alpha Industries is considering a project with an initial cost of $9.4 million. The project will produce cash inflows of $2.14 million per year for 6 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 6.03 percent and a cost of equity of 11.55 percent. The debt-equity ratio is .74 and the tax rate is 21 percent. What is the net present value of the project? Multiple Choice $457,785 $296,838 $142,207 $377,296 $396,160