Company is evaluating a 10-year project requiring an initial investment of $50 million. The firm has made the following projections:
EBIT = $10 million
Interest Expense = $2 million
Tax Rate = 40%
Depreciation = $5 million/year
Debt/Equity Ratio = 20%
Cost of Equity = 15%
Total Cost of Capital = 12%
The firm does not intend to change its debt to equity ratio when making additional investments. Using FCFF, what is the expected net present value (NPV) of this project for the firm?
A. $9.18 million
B. $12.15 million
C. $16.83 million
D. $21.34 million