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?
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