Mullen Group is considering adding another division that requires a cash outlay of $30,000 and is expected to generate $7.770 in after-tax cash flows each year for the next five years. The company's target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6%, the cost of preferred is 7%, and the cost of retained earnings is 12%. The firm will not be issuing any new stock. What is the NPV of this project? Your answer should be between 94.50 and 920.42, rounded to 2 decimal places, with no special characters.
Mullen Group is considering adding another division that requires a cash outlay of $30,000 and is expected to generate $7.770 in after-tax cash flows each year for the next five years. The company's target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6%, the cost of preferred is 7%, and the cost of retained earnings is 12%. The firm will not be issuing any new stock. What is the NPV of this project? Your answer should be between 94.50 and 920.42, rounded to 2 decimal places, with no special characters.
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 11P
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Question
Masukh
![Mullen Group is considering adding another division that requires a cash outlay of $30,000 and is expected to generate $7.770 in after-tax cash flows each year for the
next five years. The company's target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6%, the cost of preferred is
7%, and the cost of retained earnings is 12%. The firm will not be issuing any new stock. What is the NPV of this project?
Your answer should be between 94.50 and 920.42, rounded to 2 decimal places, with no special characters.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5411637d-87b4-4cdb-8ce6-f455c9f2e71d%2F254f5278-d717-484b-a86a-e160f0c7a1b6%2Fop7nt7a_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Mullen Group is considering adding another division that requires a cash outlay of $30,000 and is expected to generate $7.770 in after-tax cash flows each year for the
next five years. The company's target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6%, the cost of preferred is
7%, and the cost of retained earnings is 12%. The firm will not be issuing any new stock. What is the NPV of this project?
Your answer should be between 94.50 and 920.42, rounded to 2 decimal places, with no special characters.
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