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Business, 10.05.2021 20:20 krystalhurst97

Chernobai Corporation has equity with a market value of $12.1 million. It also has debt with the market value of $4.20 million. The corporation is wondering if a new project that is riskier than the corporation should be undertaken or not. And so, the corporation decided to use a risk adjustment factor of 1.7 percent to adjust the rate of return that it will use as the applicable discount rate for the project. The new project will require an immediate investment of $2.46 million. The project will generate profits of $641,000 every year for the next 6 years. The corporation's cost of equity is 11.59 percent. Its pretax cost of debt is 5.01 percent. The corporate income tax rate that the corporation faces is 35 percent. Calculate the new project's Net Present Value.

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