Use the Following Information to Answer the Question(s)below

question 20

Multiple Choice

Use the following information to answer the question(s) below.
Taggart Transcontinental is considering a $250 million investment to launch a new rail line.The project is expected to generate a free cash flow of $32 million per year,and its unlevered cost of capital is 8%.Taggart's corporate tax rate is 21%.Taggert has 4 million shares of stock outstanding.
-Assume that to fund the investment Taggart will take on $150 million in permanent debt with the remainder of the investment funded by a cut in dividends.Assuming Taggart will incur a 2% (after-tax) underwriting fee on the new debt issue,the NPV of Taggart's new rail line is closest to:

• A)$180 million.
• B)$200 million.
• C)$235 million.
• D)$240 million.

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Definitions:

Sociological Imagination

C. W. Mills’s term for the ability to perceive how dynamic social forces influence individual lives.

Language

A shared symbol system of rules and meanings that governs the production and interpretation of speech.

Cultural Change

The transformation of a society or culture through innovation, invention, discovery, or contact with other cultures.

Situational Ethics

An ethical theory proposing that moral decisions should be based on the context of a situation, rather than on fixed laws or norms.