Assume That to Fund the Investment Taggart Will Take on $150

question 59

Multiple Choice

Assume that to fund the investment Taggart will take on $150 million in permanent debt with the remainder of the investment funded by a cut in dividends.Assuming Taggart will incur a 2% (after-tax) underwriting fee on the new debt issue,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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