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Generate perpetual cash flows

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1. A firm is considered a project that will generate perpetual cash flows of $15,000 per year beginning next year. The project has the same risk as the firm's overall operations and must be financed externally. Equity costs 14% and debt costs 4% on an after tax basis. The firm's D/E ratio is 0.8.

What is the most the firm can pay for the project and still earn its required return?

Reference no: EM131533928

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