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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.
-Assuming that to fund the investment Taggart will take on $250 million in permanent debt and ignoring issuance costs,the NPV of Taggart's new rail line is closest to:
Estimated Entry
An accounting entry made to record expected but not yet realized financial transactions or adjustments.
Net Realizable Value
The estimated selling price in the ordinary course of business, minus any costs reasonably expected to be incurred in completion, transportation, and selling.
Gross Accounts Receivable
The total amount owed to a business by its customers before adjusting for any allowances for doubtful accounts.
Allowance for Doubtful Accounts
A contra-asset account that represents the amount of receivables a company does not expect to collect.
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