A project costs $7 million and is expected to produce cash flows if $2 million a year for
10 years. The opportunity cost of capital is 16%. If the firm has to issue stock to undertake the project and issue costs are $0.5 million, what is the project's APV?
A) $9.67 million
B) $2.17 million
C) $1.67 million
D) $0.67 million

Question

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The Answer of A project costs $7 million and is expected to produce cash flows if $2 million a year for
10 years. The opportunity cost of capital is 16%. If the firm has to issue stock to undertake the project and issue costs are $0.5 million, what is the project's APV?
A) $9.67 million
B) $2.17 million
C) $1.67 million
D) $0.67 million

A Project Costs $7 Million and Is Expected to Produce