#7 Suppose that Caterpillar (CAT) has a project with the following cash flows: YEAR Cash flow 0 -$40.00 1 2 $13.00 $11.00 3 $11.00 4 $12.00 The company has debt valued at 45.00 billion on its balance sheet, while the market value of its common stock is roughly 31.00 billion. The yield to maturity on the debt is 5.50%, and the cost of equity for the firm is 12.00%. Finally, the marginal tax rate facing the company is 34.00%. What is the NPV for this project?
#7 Suppose that Caterpillar (CAT) has a project with the following cash flows: YEAR Cash flow 0 -$40.00 1 2 $13.00 $11.00 3 $11.00 4 $12.00 The company has debt valued at 45.00 billion on its balance sheet, while the market value of its common stock is roughly 31.00 billion. The yield to maturity on the debt is 5.50%, and the cost of equity for the firm is 12.00%. Finally, the marginal tax rate facing the company is 34.00%. What is the NPV for this project?
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter7: Corporate Valuation And Stock Valuation
Section: Chapter Questions
Problem 11P: Brook Corporation’s free cash flow for the current year (FCF0) was $3.00 million. Its investors...
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