In: Finance

Dorman Industries has a new project available that requires an initial investment of $6.2 million. The project will provide unlevered cash flows of $845,000 per year for the next 20 years. The company will finance the project with a debt-to-value ratio of .25. The company’s bonds have a YTM of 6.3 percent. The companies with operations comparable to this project have unlevered betas of 1.32, 1.25, 1.47, and 1.42. The risk-free rate is 3.3 percent, and the market risk premium is 6.5 percent. The company has a tax rate of 34 percent. |

What is the NPV of this project? |

NPV | $ |

Dorman Industries has a new project available that requires an
initial investment of $6.1 million. The project will provide
unlevered cash flows of $835,000 per year for the next 20 years.
The company will finance the project with a debt-to-value ratio of
.3. The company’s bonds have a YTM of 6.2 percent. The companies
with operations comparable to this project have unlevered betas of
1.31, 1.24, 1.46, and 1.41. The risk-free rate is 3.2 percent, and
the market risk premium...

Dorman Industries has a new project available that requires an
initial investment of $5.2 million. The project will provide
unlevered cash flows of $745,000 per year for the next 20 years.
The company will finance the project with a debt-to-value ratio of
.45. The company’s bonds have a YTM of 6.7 percent. The companies
with operations comparable to this project have unlevered betas of
1.22, 1.15, 1.37, and 1.32. The risk-free rate is 3.7 percent, and
the market risk premium...

Dorman Industries has a new project available that requires an
initial investment of $5.6 million. The project will provide
unlevered cash flows of $785,000 per year for the next 20 years.
The company will finance the project with a debt-to-value ratio of
.4. The company’s bonds have a YTM of 6.6 percent. The companies
with operations comparable to this project have unlevered betas of
1.26, 1.19, 1.41, and 1.36. The risk-free rate is 3.6 percent, and
the market risk premium...

Dorman Industries has a new project available that requires an
initial investment of $6.5 million. The project will provide
unlevered cash flows of $875,000 per year for the next 20 years.
The company will finance the project with a debt-to-value ratio of
.4. The company’s bonds have a YTM of 5.9 percent. The companies
with operations comparable to this project have unlevered betas of
1.35, 1.28, 1.50, and 1.45. The risk-free rate is 2.9 percent, and
the market risk premium...

Dorman Industries has a new project available that requires an
initial investment of $6.5 million. The project will provide
unlevered cash flows of $875,000 per year for the next 20 years.
The company will finance the project with a debt-to-value ratio of
.4. The company’s bonds have a YTM of 5.9 percent. The companies
with operations comparable to this project have unlevered betas of
1.35, 1.28, 1.50, and 1.45. The risk-free rate is 2.9 percent, and
the market risk premium...

Fitzgerald Industries has a new project available that requires
an initial investment of $5.3 million. The project will provide
unlevered cash flows of $845,000 per year for the next 20 years.
The company will finance the project with a debt-value ratio of
.25. The company’s bonds have a YTM of 6.1 percent. The companies
with operations comparable to this project have unlevered betas of
1.20, 1.13, 1.35, and 1.30. The risk-free rate is 3.5 percent and
the market risk premium...

Fitzgerald Industries has a new project available that requires
an initial investment of $4.8 million. The project will provide
unlevered cash flows of $844,000 per year for the next 20 years.
The company will finance the project with a debt-value ratio of
.25. The company’s bonds have a YTM of 6.5 percent. The companies
with operations comparable to this project have unlevered betas of
1.24, 1.17, 1.39, and 1.34. The risk-free rate is 3.9 percent and
the market risk premium...

Stackhouse Industries has a new project available that requires
an initial investment of $4.5 million. The project will provide
unlevered cash flows of $675,000 per year for the next 20 years.
The company will finance the project with a debt-to-value ratio of
.40. The company’s bonds have a YTM of 6.8 percent. The companies
with operations comparable to this project have unlevered betas of
1.15, 1.08, 1.30, and 1.25. The risk-free rate is 3.8 percent, and
the market risk premium...

Fitzgerald Industries has a new project available that requires
an initial investment of $5.1 million. The project will provide
unlevered cash flows of $843,000 per year for the next 20 years.
The company will finance the project with a debt-value ratio of .4.
The company’s bonds have a YTM of 6.4 percent. The companies with
operations comparable to this project have unlevered betas of 1.23,
1.16, 1.38, and 1.33. The risk-free rate is 3.8 percent and the
market risk premium...

Fitzgerald Industries has a new project available that requires
an initial investment of $4.8 million. The project will provide
unlevered cash flows of $852,000 per year for the next 20 years.
The company will finance the project with a debt-value ratio of
.25. The company’s bonds have a YTM of 7.3 percent. The companies
with operations comparable to this project have unlevered betas of
1.07, .95, 1.22, and 1.17. The risk-free rate is 4.5 percent and
the market risk premium...

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