Project has an initial cost of $482000 of which 40 percent will be financed

jagguarpaw January 17, 2017 0 Comments

Question: A project has an initial cost of $482,000 of which…

A project has an initial cost of $482,000 of which 40 percent will be financed with debt. The interest rate on the debt is 9 percent. The cash flow from the project to the equity holders if the firm were unlevered would be $94,000. What is the cash flow to the equity holders given that the firm is leveraged and has a tax rate of 35 percent?