Janet Enterprises Ltd has a market value of total assets of $800m and $200 million of debt at an average interest rate of 8%p.a. The firm is looking to invest $2 million in a project to expand its existing operations; it is estimated to produce unlevered after-tax cash flows of $340,000 per year forever. The project is financed in line with the firm’s existing capital structure which structure is to be maintained. The firm's levered cost of equity capital is 15% per annum, and the firm's marginal tax rate is 30%. What is the NPV of the new project (rounded to the nearest dollar)?
I got answer is 591463, but the sample test solution is 687747. I dont know why I get a wrong answer(does the solution wrong?) please show the answer step by step. thank you
