Use the following information to evaluate whether your firm


Use the following information to evaluate whether your firm should undertake the proposed project. The project is expected to generate cash flows of $10,000 a year for years 1-3, and cash flows of $15,000 a year for years 4-6. The initial investment required for the project is $50,000. Your firm has $250 million in long-term debt, no preferred stock, and 15 million common shares outstanding. The current stock price is $45 per share. All of the debt was raised in one bond issue, which has a coupon rate of 4% and currently has a yield to maturity of 4.5%. The firm has a beta of 1.2. Assume a market risk premium of 5% and a risk-free rate of 2.5%, and a tax rate of 35%. Is this an acceptable project for your firm? Why or why not? (Compute return of equity first, then WACC, then NPV of this project).

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Financial Management: Use the following information to evaluate whether your firm
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