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REVIEW CLASS for FIN 401.docx

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FIN 401
Ron Babin

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REVIEW CLASSFIN 401 DR SIRAJUM M SARWARChapter 16A firm has a capital structure of 40 debt and 60 equityDebt can be issued at a return of 10 while the cost of equity for the firm is 15The firm is considering a 50 million expansion of their production facilityThe project has the same risk as the firm overall and will earn 12 million per year for 6 yearsWhat is the NPV of the expansion if the tax rate facing the firm is 40ANSWACC40101460151140N6 I1140 PV PMT12FV0PV5019 NPV50195002 million
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