Description of this paper

A company is considering a new investment. The inv...

Description

Solution


Question

A company is considering a new investment. The investment cost is expected to be $72 million and will return $13.5 million for 5 years in net cash flows. The ratio of debt to equity is 1 to 1. The cost of equity is 13%, the cost of debt is 9%, and the tax rate is 34%. Assuming average risk, what?s the appropriate discount rate?

 

Paper#8490 | Written in 18-Jul-2015

Price : $25
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