Webster's Latest Project Has an Initial Cost of $1

question 24

Multiple Choice

Webster's latest project has an initial cost of $1.23 million and unlevered perpetual cash flows of $238,000.The firm has a debt-equity ratio of .42,a pretax cost of debt of 7.6 percent,a cost of equity of 13.3 percent,and a tax rate of 21 percent.What is the NPV of the project?

• A)$864,010
• B)$887,982
• C)$906,056
• D)$909,411
• E)$892,020

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