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1. Harley Motors has $11 million in assets, which were financed with $3.3 million of debt and $7.7 million in equity. Harley's beta is currently 0.9 and its tax rate is 40%. Use the Hamada equation to find Harley's unlevered beta, bU. Round your answer to two decimal places.

2. Bolman corporation is considering an expansion project that will begin next year ( time 0). Bolman cost of capital is 12%. Reinvestment rate is 15%. The initial cost of the project will be $250,000 and it is expected to generate the following cash flows over its five-year life:

year $

1 $40,000

2 $60,000

3 $90,000

4 $90,000

5 $90,000

What is the Modified Net Present Value ( MNPV ) for the expansion project?

a. $268,811

b. $119,025

c. $25,726

d. $18,811

e. $5,871

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92743976

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