Answer Happy

Posted: **Sat Feb 26, 2022 9:05 am**

: B The Firm Finances The Project With 20000 Debt At 11 With 100 After Tax Flotation Costs Principal Is Repaid At 30 1 (23.04 KiB) Viewed 51 times

: B The Firm Finances The Project With 20000 Debt At 11 With 100 After Tax Flotation Costs Principal Is Repaid At 30 2 (40.09 KiB) Viewed 51 times

: B The Firm Finances The Project With 20000 Debt At 11 With 100 After Tax Flotation Costs Principal Is Repaid At 30 3 (40.09 KiB) Viewed 51 times

b. The firm finances the project with $20000 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?

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 $-2000, $305, $610, $555, $500 from year 0 to 4 respectively. The unlevered cost of equity is 30%. a. Calculate the NPV? Should this project be accepted? b. The firm finances the project with $20000 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?