Homework Answers
Financing Cost = Amount Required * Issue Cost % = $20,000,000 * 0.03 = $600,000, or $0.6 million
NPV with external financing = Original NPV - Financing Cost = $15 million - $0.6 million = $14.4 million
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You are planning a new project that is to be entirely financed by issuing new debt. The project will require $20.00 mil...
You are planning a new project that is to be entirely financed by issuing new debt....
You
are planning a new project that is to be entirely financed by
issuing new debt. The project will require
$ 20.09$20.09
million in financing and you estimate its NPV to be
$ 14.757$14.757
million. The issue costs for the debt will be
2.7 %2.7%
of face value. Taking into account the costs of external
financing, what is the NPV of the project?
The new NPV will be (Round to the nearest
dollar.)
X P 13-26 (similar to) Question Help...
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You
are planning a new project that is to be entirely financed by
issuing new debt. The project will require
$ 20.09$20.09
million in financing and you estimate its NPV to be
$ 14.757$14.757
million. The issue costs for the debt will be
2.7 %2.7%
of face value. Taking into account the costs of external
financing, what is the NPV of the project?
The new NPV will be (Round to the nearest
dollar.)
X P 13-26 (similar to) Question Help...
17. You are planning a new project that is to be entirely financed by issuing new debt. The project will require $20.19 million in financing and you estimate its NPV to be $15.061 million. The issue costs for the debt will be 2.8% of face value. Taking into account the costs of external financing, what is the NPV of the project? The new NPV will be $ . (Round to the nearest dollar.)
Consider the case of Kuhn Co. Kuhn Co. is considering a new project that will require an initial investment of $4 million. It has a target capital structure of 58% debt, 6% preferred stock, and 36% common equity. Kuhn has noncallable bonds outstanding that mature in 15 years with a face value of $1,000, an annual coupon rate of 11%, and a market price of $1,555.38. The yield on the company's current bonds is a good approximation of the yield...
Kuhn Co. is considering a new project that will require an initial investment of $45 million. It has a target capital structure of 35% debt, 2% preferred stock, and 63% common equity. Kuhn has noncallable bonds outstanding that mature in 15 years with a face value of $1,000, an annual coupon rate of 11%, and a market price of $1,555.38. The yield on the company's current bonds is a good approximation of the yield on any new bonds that it...
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