McCann Catching, Inc. has 2.00 million shares of stock outstanding. The stock currently sells for $12.98...

McCann Catching, Inc. has 2.00 million shares of stock outstanding. The stock currently sells for $12.98 per share. The firm’s debt is publicly traded and was recently quoted at 89.00% of face value. It has a total face value of $16.00 million, and it is currently priced to yield 8.00%. The risk free rate is 2.00% and the market risk premium is 8.00%. You’ve estimated that the firm has a beta of 1.18. The corporate tax rate is 38.00%.

The firm is considering a $44.17 million expansion of their production facility. The project has the same risk as the firm overall and will earn $12.00 million per year for 7.00 years.

What is the NPV of the expansion? (answer in terms of millions, so 1,000,000 would be 1.0000)

Expert Solution

jeff jeffy answered 2 years ago

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