Solution-Pay for the project and still earn its required

Pay for the project and still earn its required return

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Reference no: EM131412497

A firm is considering 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: EM131412497

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Pay for the project and still earn its required return : 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..

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Pay for the project and still earn its required return

Reference no: EM131412497

Reference no: EM131412497

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