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Unformatted text preview: Its debentures are priced at $110 and pay coupons annually. The current return on Tristan Ltd debentures is 2% above the government bond rate. No company or personal taxes are levied. The existing capital structure is unlikely to change. b. Should Tristan Ltd go ahead with an expansion of their factory that costs $2 million today and will generate a cash flow of $350,000 per year for ten years? Show all computations and explain why you chose any additional numbers needed to make this decision....
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- Three '08