Your Firm Has an Average-Risk Project Under Consideration A)About 16

question 28

Multiple Choice

Your firm has an average-risk project under consideration.You choose to fund the project in the same manner as the firm's existing capital structure.If the cost of debt is 11.00%,the cost of preferred stock is 12.00%,the cost of common stock is 17.00%,and the WACC adjusted for taxes is 15.00%,what is the IRR of the project,given the expected cash flows listed here? Use a financial calculator to determine your answer. $$\begin{array} { | l | c | c | c | c | } \hline \text { Category } & \mathrm { T } _ { 0 } & \mathrm {~T} _ { 1 } & \mathrm {~T} _ { 2 } & \mathrm {~T} _ { 3 } \\\hline \text { Investment } & - \$ 2,000,000 & & & \\\hline \text { NWC } & - \$ 350,000 & & & \$ 350,000 \\\hline \text { Operating Cash Flow } & & \$ 950,000 & \$ 950,000 & \$ 950,000 \\\hline \text { Salvage } & & & & \$ 50,000 \\\hline \text { Total Incremental Cash Flow } & - \$ 2,350,000 & \$ 950,000 & \$ 950,000 & \$ 1,350,000 \\\hline\end{array}$$

• A)About 16.97%
• B)About 12.02%
• C)About 11.16%
• D)About 8.94%

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The realization or fulfillment of one's talents and potentialities, especially considered as a drive or need present in everyone.

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A behavioral therapy technique used to reduce phobic responses through gradual exposure to the feared object or situation.

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Therapeutic methods used to treat fears and phobias by gradually exposing patients to the feared object or context without any danger.