Homework answers / question archive / Maple, Inc

Maple, Inc

Finance

Share With

Maple, Inc. is considering a new investment project. The investment cost is expected to be $28.40 million and will return $13 million for 5 years in net cash flows. The ratio of debt to equity (D/E) is 1.8 to 1. The cost of equity is 12%, the pretax cost of debt is 6.4%, and the tax rate is 25%. The appropriate discount rate (WACC), assuming average risk, is: