Your firm is considering a proposed project which lasts 3


Your firm is considering a proposed project which lasts 3 years and has an initial investment of 200,000. The after-tax operating cash flows (OCFs) are estimated at $60,000 for year 1, $120,000 for year 2, and $135,000 for year 3. The firm has a target debt/equity ratio of 1.2. The firm's cost of equity its 14% and it cost of debt is 9%. The tax rate is 34%, please answer the following: a. Calculate the Net Present Value. Should the firm accept the project? b. Calculate the Profitability Index (CFin/CF out). Should the firm accept the project? c. Calculate the payback method. Should the firm accept the project? d. Does the firm's debt-to-equity impact on the outcome of your decision? Why?

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Financial Management: Your firm is considering a proposed project which lasts 3
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