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

question 45

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. Using the flow to equity methodology,what is the value of the equity claim?

• A)−$1,540,000
• B)$446,570,866.00
• C)$36,580,767.55
• D)$30,716,236.13

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