Assignment:
WACC and NPV. Margaret River Wines (MRW) has a project available that will provide after-tax cash flows of $215 000 for the next eight years. The project has more risk than the company, so the general manager has told you to use an adjustment factor of +3% in your calculations. The company uses 60% equity and 40% debt in its capital structure. The cost of equity is 14%, and the after-tax cost of debt is 8%. What is the most MRW can afford to pay for the new project?