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(Solved): You are considering a project with an initial investment of \( \$ 1,700,000 \). The predicted free ...



You are considering a project with an initial investment of \( \$ 1,700,000 \). The predicted free cash flows of the project

You are considering a project with an initial investment of \( \$ 1,700,000 \). The predicted free cash flows of the project for years \( 1,2,3 \), and 4 are \( \$ 800,000, \$ 800,000, \$ 300,000 \), and \( \$ 200,000 \), respectively. Assume that the cost of debt, preferred stock, and common stock is \( 8 \%, 10 \% \), and . \( 12 \% \), respectively. You plan on raising \( 1 / 3 \) of required capital from each stakeholder. The firm has a tax rate of \( 30 \% \). Using the WACC method, what is the NPV of this project? \( \$ 187,439.1 \) \( \$ 124,767.2 \) \( \$ 74,515.0 \) There is not enough information to answer this question \( \$ 84,921.4 \)


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After tax cost of debt = cost of debt *(1-tax rate) WACC = sum of (weight *cost) A1 B C D E 2 Given before tax cost of debt 8.00% 3
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