WACC and net present value in considering an investment
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You are considering an investment in a project that requires an initial outlay of $225,000 and will produce after-tax cash flows of $35,000 per year for the next 15 years. Your firm uses 50% debt and 50% equity in its financing. The after-tax cost of debt and equity are 9% and 15%, respectively.
a. What is the firm's weighted average cost of capital?
b. What is the project's net present value?
c. Should the project be accepted?
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The expert considers a weighted average cost of capital and net present values.
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a. What is the firm's weighted average cost of capital?
9%*50% + ...
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