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Business, 24.03.2020 02:01 lexusdixon3

Suppose a firm is considering a $20 million project in Seattle that will last 4 years. Assume that cash revenues less cash expenses are $8.5 million for each of the 4 years. Additionally, assume that the corporate tax rate is 35 percent. The risk-free rate is 6%, and the unlevered cost of equity is 15%. Assume that the firm depreciates the initial investment straight-line to zero over the life of the project.

Calculate the All-equity value of the firm. You are doing this with a financial calculator and you must show and explain your steps. You must explain your choice(s) of discount rates. It is best if your equation is a sum of each part that you show the number for each piece of the PV, for maximum partial credit.

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