A company has 22% cost of equity 8% before tax cost of debt 1= debt to equity ratio 40% = tax rate is intereste in investing in a project with intitial investment of 2 million which will provide 400,000 pretax annual cash flows in perpetuity. The project risk is similar to over all firm, What is NPV of the firm… Iget a silly calculation correct answer is -208,955 it would be great if u show me how u got ur answer tks

-208,955 CFo = -2,000,000 C01 = 240,000 (400,000 * 0.6

Two other methods: Method 2 PV of Perpetuity = 240,000 / 0.134 = 1,791,045 NPV = -2,000,000 + 1,791,045 = -208,955 Method 3 Use the TVM function on the calculator (N=999, I=13.4, PMT=240,000, FV=0). Solve for PV, and add to -2,000,000

perfect !