- 1 Consider A Project Of The Pearson Company The Timing And Size Of The Incremental After Tax Cash Flows For An All Eq 1 (21.62 KiB) Viewed 56 times
1. Consider a project of the Pearson Company. The timing and size of the incremental after- tax cash flows for an all-eq
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1. Consider a project of the Pearson Company. The timing and size of the incremental after- tax cash flows for an all-eq
1. Consider a project of the Pearson Company. The timing and size of the incremental after- tax cash flows for an all-equity firm are $-1000, $305, $610, $555, $500 from year 0 to 4 respectively. The unlevered cost of equity is 38%. a. Calculate the NPV? Should this project be accepted? b. The firm finances the project with $24000 debt at 11% with $100 after-tax flotation costs. Principal is repaid at $3000 per year with added interest. Pearson's tax rate is 60%. The net present value of the project under leverage? Now, Should this project be accepted?