Travis & Sons Has a Capital Structure Which Is Based

question 3

Multiple Choice

Travis & Sons has a capital structure which is based on 40 percent debt,5 percent preferred stock,and 55 percent common stock.The pre-tax cost of debt is 7.5 percent,the cost of preferred is 9 percent,and the cost of common stock is 13 percent.The company's tax rate is 39 percent.The company is considering a project that is equally as risky as the overall firm.This project has initial costs of $325,000 and annual cash inflows of $87,000,$279,000,and $116,000 over the next three years,respectively.What is the projected net present value of this project?

• A)$68,211.04
• B)$68,879.97
• C)$69,361.08
• D)$74,208.18
• E)$76,011.23

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Definitions:

Convoluted Tubules

A series of twisted tubes involved in the filtration and reabsorption process within the kidney.

Mitochondria

Organelles within cells that generate most of the cell's supply of adenosine triphosphate (ATP), used as a source of chemical energy.

Glomerular Capsule

A double-walled cup surrounding the glomerulus in the nephron of the kidney, where filtration of blood begins.

Urine Specific Gravity

A measure of the concentration of solutes in the urine, indicating the kidney's ability to concentrate urine and helping in assessing hydration status.