Use the Following Information to Answer the Question(s)below

question 95

Multiple Choice

Use the following information to answer the question(s) below.
Taggart Transcontinental is considering a $250 million investment to launch a new rail line.The project is expected to generate a free cash flow of $32 million per year,and its unlevered cost of capital is 8%.Taggart's corporate tax rate is 21%.Taggert has 4 million shares of stock outstanding.
-Assuming that to fund the investment Taggart will take on $250 million in permanent debt and ignoring issuance costs,the NPV of Taggart's new rail line is closest to:

• A)$195 million.
• B)$200 million.
• C)$235 million.
• D)$240 million.

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Definitions:

Interlocking Directorates

The practice of sharing board members among different companies, which can lead to a concentration of power and influence.

Board of Directors

A group of elected or appointed members who jointly oversee the activities and governance of a company or organization.

Outright Ownership

A legal term indicating that a property or asset is owned completely without any encumbrances or conditions.

Economy

An organized system for the production, distribution, and consumption of goods and services within a specific geographical region or country.