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

question 39

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 through issuance of new equity.Assuming Taggart will incur a 2% (after-tax) underwriting fee on the new debt issue and a 5% underwriting fee on the issuance of new equity,the NPV of Taggart's new rail line is closest to:

• A)$175 million.
• B)$200 million.
• C)$235 million.
• D)$240 million.

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Definitions:

Direct Labor-Hours

The total hours worked by employees directly involved in the production process, often used as a basis for allocating overhead costs.

Product J3

Product J3 could refer to a specific model or item within a company's lineup, identified by the code "J3."

Direct Labor-Hours

The total hours worked by employees who are directly involved in the production of goods and services, often used for costing and efficiency analyses.

General Factory

refers to the overall operations and activities that take place within a manufacturing facility, including production, maintenance, and storage.