NuPress Valet Has an Improved Version of Its Hotel Stand

question 41

Multiple Choice

NuPress Valet has an improved version of its hotel stand.The investment cost is expected to be £72 million and will return £13.5 million for 5 years in net cash flows.The ratio of debt to equity is 1
To 1.The cost of equity is 13%, the cost of debt is 9%, and the tax rate is 34%.The appropriate
Discount rate, assuming average risk, is:

• A)8.65%
• B)9%
• C)9.47%
• D)10.5%
• E)13%

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