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stranahan stranahan
wrote...
Posts: 3324
8 years ago
Your firm has an average-risk project under consideration. You choose to fund the project in the same manner as the firm's existing capital structure. If the cost of debt is 11.00%, the cost of preferred stock is 12.00%, the cost of common stock is 17.00%, and the WACC adjusted for taxes is 15.00%, what is the IRR of the project, given the expected cash flows listed here? Use a financial calculator to determine your answer.

Category   T0   T1   T2   T3
Investment   -$3,000,000         
NWC   -$350,000         $350,000
Operating Cash Flow      $1,200,000   $1,200,000   $1,200,000
Salvage              $50,000
Total Incremental Cash Flow   -$3,350,000   $1,200,000   $1,200,000   $1,600,000

A) About 8.94%
B) About 12.02%
C) About 13.11%
D) About 11.16%
Textbook 
Financial Management: Core Concepts

Financial Management: Core Concepts


Edition: 2nd
Author:
Read 182 times
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swift-hoveswift-hove
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Posts: 29
Rep: 2 0
8 years ago
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stranahan Author
wrote...
7 years ago
Thank you for  the help. I had a few questions on a few of them and this really confirmed my answers.
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