Homework Answers
first we will calculate wacc of the firm
wacc is weighted average of cost of individual finances
weights are 46% debt and 54% equity
cost of equity is 13%
after tax cost of debt is 9*(1-0.37) = 5.67%
wacc = 46%*5.67 + 54%*13% = 9.6282%
npv is present value of cashflows less initial investment
npv is 9.90 million
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