Give typing answer with explanation and conclusion A company pursues a cost-cutting initiative that costs $21,000 to implement. Thereafter, however, the initiative reduces after-tax costs by $6,500 per year perpetually. The company relies on 64% debt financing at a 11.4% pretax interest rate. The company marginal tax rate is 31%. The company β is 1.41, short-term risk-free rate is 7.4%, and required risk premium for the market portfolio is 11.0%. Find the project’s net present value. -19,083 -23,090 -25,399 -27,939 -20,991
Give typing answer with explanation and conclusion A company pursues a cost-cutting initiative that costs $21,000 to implement. Thereafter, however, the initiative reduces after-tax costs by $6,500 per year perpetually. The company relies on 64% debt financing at a 11.4% pretax interest rate. The company marginal tax rate is 31%. The company β is 1.41, short-term risk-free rate is 7.4%, and required risk premium for the market portfolio is 11.0%. Find the project’s net present value. -19,083 -23,090 -25,399 -27,939 -20,991
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 11P
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Give typing answer with explanation and conclusion
A company pursues a cost-cutting initiative that costs $21,000 to implement. Thereafter, however, the initiative reduces after-tax costs by $6,500 per year perpetually. The company relies on 64% debt financing at a 11.4% pretax interest rate. The company marginal tax rate is 31%. The company β is 1.41, short-term risk-free rate is 7.4%, and required risk premium for the market portfolio is 11.0%. Find the project’s net present value .
-19,083
-23,090
-25,399
-27,939
-20,991
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