Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. landman corporation (lc) manufactures time series

Landman Corporation (LC) manufactures time series photographic equipment. It is currently at its target debt-equity...

80.2K

Verified Solution

Question

Finance

Landman Corporation (LC) manufactures time series photographic equipment. It is currently at its target debt-equity ratio of .78. Its considering building a new $66.8 million manufacturing facility. This new plant is expected to generate aftertax cash flows of $7.93 million in perpetuity. There are three financing options: A new issue of common stock: The required return on the companys new equity is 15.2 percent. A new issue of 20-year bonds: If the company issues these new bonds at an annual coupon rate of 7.1 percent, they will sell at par. Increased use of accounts payable financing: Because this financing is part of the companys ongoing daily business, the company assigns it a cost that is the same as the overall firm WACC. Management has a target ratio of accounts payable to long-term debt of .10. (Assume there is no difference between the pretax and aftertax accounts payable cost.) If the tax rate is 23 percent, what is the NPV of the new plant? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Which of the following companies would you expect to have thehighest operating leverage number...

Accounting
Q

Discuss the benefits of developing a portfolio throughout this graduate education program. 250 words

Psychology
Q

For 2 x 3 and f x 3x 6x determine a the domain and range...

Geometry
Q

Prove the identity sin 10x 2 sin 5x cos 5x

Geometry
Q

K Sixty five percent of men consider themselves knowledgeable football fans If 14 men are...

Statistics
Q

42)Let f(x)=x-5Determine the equations of two unique tangent lines of f that intersect at (-5,...

Calculus
Q

K Solve the equation 4 16 The solution set is Type an integer or a...

Calculus
Q

how you can apply managerial accounting concepts, such as budgeting, to your personal life or...

Accounting
Q

Question Content Area Variable Costing Marsich Company has the following information for March: ...

Accounting
Q

Spando Apparel uses the LIFO inventory method for external reporting and for income tax purposes...

Accounting
Q

c. Compute the balance reported by Purchase as its investment in Steal at December 31,208....

Accounting
Q

The Superior Company has provided the following account balances: Cash $152,600; ...

Accounting