14 ants eBook Print References Triad Corporation has established a joint venture with Tobacco Road Construction, Inc., to build a toll road in North Carolina. The initial investment in paving equipment is $145 million. The equipment will be fully depreciated using the straight-line method over its economic life of five years. Earnings before interest, taxes, and depreciation collected from the toll road are projected to be $21.7 million per annum for 20 years starting from the end of the first year. The corporate tax rate is 25 percent. The required rate of return for the project under all-equity financing is 14 percent. The pretax cost of debt for the joint partnership is 8.3 percent. To encourage investment in the country's Infrastructure, the U.S. government will subsidize the project with a $65 million, 15-year loan at an interest rate of 4.8 percent per year. All principal will be repaid in one balloon payment at the end of Year 15. What is the adjusted present value of this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89) Adjusted present value
14 ants eBook Print References Triad Corporation has established a joint venture with Tobacco Road Construction, Inc., to build a toll road in North Carolina. The initial investment in paving equipment is $145 million. The equipment will be fully depreciated using the straight-line method over its economic life of five years. Earnings before interest, taxes, and depreciation collected from the toll road are projected to be $21.7 million per annum for 20 years starting from the end of the first year. The corporate tax rate is 25 percent. The required rate of return for the project under all-equity financing is 14 percent. The pretax cost of debt for the joint partnership is 8.3 percent. To encourage investment in the country's Infrastructure, the U.S. government will subsidize the project with a $65 million, 15-year loan at an interest rate of 4.8 percent per year. All principal will be repaid in one balloon payment at the end of Year 15. What is the adjusted present value of this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89) Adjusted present value
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:14
ants
eBook
Print
References
Triad Corporation has established a joint venture with Tobacco Road Construction, Inc.,
to build a toll road in North Carolina. The initial investment in paving equipment is $145
million. The equipment will be fully depreciated using the straight-line method over its
economic life of five years. Earnings before interest, taxes, and depreciation collected
from the toll road are projected to be $21.7 million per annum for 20 years starting from
the end of the first year. The corporate tax rate is 25 percent. The required rate of return
for the project under all-equity financing is 14 percent. The pretax cost of debt for the
joint partnership is 8.3 percent. To encourage investment in the country's Infrastructure,
the U.S. government will subsidize the project with a $65 million, 15-year loan at an
interest rate of 4.8 percent per year. All principal will be repaid in one balloon payment at
the end of Year 15.
What is the adjusted present value of this project? (Do not round intermediate
calculations and enter your answer in dollars, not millions of dollars, rounded to 2
decimal places, e.g., 1,234,567.89)
Adjusted present value
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education