What is the net present value of project

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Reference no: EM132059323

1. Wentworth's Five and Dime store has cost of quality of 12.7 percent. The company has an aftertax cost of debt of 4.4 percent, and the tax rate is 40 percent. If the company's debt-equity is .87, what is the weighted average cost of capital? Please show work.

2. Alpha Industries is considering a project with an initial cost of $9.6 million. The project will produce cash inflows of $1.79 million per year for 8 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 6.09 percent and a cost of equity of 11.59 percent. The debt-equity ratio is .76 and the tax rate is 39 percent. What is the net present value of the project? Please show work!!

Answers: $637,482, $525,397, $612,963, $228,649, $551,667

Reference no: EM132059323

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