Consider a Project of the Cornell Haul Moving Company,the Timing

question 22

Multiple Choice

Consider a project of the Cornell Haul Moving Company,the timing and size of the incremental after-tax cash flows (for an all-equity firm) are shown below in millions: The firm's tax rate is 34 percent; the firm's bonds trade with a yield to maturity of 8 percent; the current and target debt-equity ratio is 3; if the firm were financed entirely with equity,the required return would be 10 percent. What is the levered after-tax incremental cash flow for year 2?

• A)$185,796,000
• B)$215,152,000
• C)$267,952,000
• D)$284,848,000