Chadstone Technology is planning to invest in a new project that has average risk and the firm wants to keep its debt-to

[answerhappygod]

Chadstone Technology Is Planning To Invest In A New Project That Has Average Risk And The Firm Wants To Keep Its Debt To 1 (48.81 KiB) Viewed 65 times

Chadstone Technology is planning to invest in a new project that has average risk and the firm wants to keep its debt-to-equity ratio constant. Below you will find the firm's market value balance sheet and cost of capital figures including its corporate tax rate. Assets Liabilities Cost of Capital Cash $0 Debt $300 Debt 5% Other Assets $800 Equity $500 Equity 10% Corporate tax rate 30% And the table below shows the new project's free cash flows. Year 0 1 2 3 Free Cash Flows $120 $60 $80 $90 The debt capacity for the firm's new project in year 1 is closest to: $47.38 $57.06 $65.72 $96.18 None of the above