Problemtravis amp sons has a capital structure which is, Ask an Expert

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Travis & Sons has a capital structure which is based on 45 percent debt, and 55 percent common stock. The pre-tax cost of debt is 7.5 percent, and the cost of common stock is 13 percent. The company's tax rate is 39 percent. The company is considering a project that is equally as risky as the overall firm. This project has initial costs of $325,000 and annual cash inflows of $87,000, $279,000, and $116,000 over the next three years, respectively.

Required:

Question: What is the projected net present value of this project?

Note: Please show how to work it out.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91170035

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