A firm is considering a $200000 project th

问题单项选择题

A firm is considering a $200000 project that will last 3 years and has the following financial data : Annual after-tax cash flows are expected to be $90000. Target debt/equity ratio is 0. 4. Cost of equity is 14 percent. Cost of debt is 7 percent. Tax rate is 34 percent. Determine the project’s payback period and net present value(NPV). Payback Period NPV（） ①A. 2.43 years $18716 ②B. 2.22 years $18716 ③C. 2.43 years $21872

A. ①

B. ②

C. ③

答案

参考答案：B

解析：

Payback Period

$200000/$90000 = 2.22 years

NPV Method

First, calculate the weights for debt and equity

w_d+w_e=1

w_e=1-w_d

w_d/w_e=0.40

w_d=0.40×(1-w_d)

w_d=0.40-0.40w_d

1.40w_d=0.40

w_d=0.286, w_e=0.714

Second, calculate WACC

WACC=(w_d×k_d)×(1-t)+(w_e×k_e) =(0.286×0.07×0.66)+(0.714×0.14)= 0.0132+0.100 =0.1132

Third, calculate the PV of the project cash flows

90/(1+0.1132)¹+90/(1+0.1132)²+90/(1+0.1132)³=$218716

And finally, calculate the project NPV by subtracting out the initial cash flow

NPV=$218716-$200000=$18716