But what is the question?
Sra
A firm has debt with a market value of $40 million and an equity value of $160 million. The rate the firm pays on its det is 8% and on its equity is 13%. The corporate tax rate in 35%. There firm s considering a project with the following cash flows:
Year 0 -$10,000
Year 1 $35,000
Year 2 $42,000
Year 3 $57,000
Year 4 -$19,000
Year 5 $27,000
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