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Dyrdek Enterprises has equity with a market value of $11.7 million and the market value...

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Finance

Dyrdek Enterprises has equity with a market value of $11.7 million and the market value of debt is $4.00 million. The company is evaluating a new project that has more risk than the firm. As a result, the company will apply a risk adjustment factor of 2.1 percent. The new project will cost $2.38 million today and provide annual cash flows of $621,000 for the next 6 years. The company's cost of equity is 11.43 percent and the pretax cost of debt is 4.97 percent. The tax rate is 40 percent. What is the project's NPV?

Multiple Choice

  • $382,845

  • $214,939

  • $218,829

  • $181,584

  • $563,858

Answer & Explanation Solved by verified expert
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