Kohwe Corporation plans to issue equity to raise $49.9 million to finance a new investment....
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Kohwe Corporation plans to issue equity to raise $49.9 million to finance a new investment. After making the investment, Kohwe expects to earn free cash flows of $10.9 million each year. Kohwe's only asset is this investment opportunity. Suppose the appropriate discount rate for Kohwe's future free cash flows is 7.5%, and the only capital market imperfections are corporate taxes and financial distress costs. a. What is the NPV of Kohwe's investment? b. What is the value of Kohwe if it finances the investment with equity? a. What is the NPV of Kohwe's investment? The NPV of Kohwe's investment is $ million. (Round to two decimal places.) b. What is the value of Kohwe if it finances the investment with equity? The value of Kohwe if it finances the investment with equity is $ million. (Round to two decimal places.) Enter your answer in each of the answer boxes
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