WACC and NPV - Cusic Cordwood Co
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Cusic Cordwood Co. has a project available that will provide aftertax cash flows of $185,000 for the next 6 years. The project has more risk than the company, so the president has told you to use an adjustment factor of plus 2 (+2) percent in your calculations. The company uses 65% equity and 35% debt in its capital structure. The cost of equity is 13.5 percent, and the aftertax cost of debt is 7.8 percent. What is the most Cusic can afford to pay for the new project?
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- BE, Bangalore University, India
- MS, University of Wisconsin-Madison
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