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What is the most the firm can pay for the project

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Question 1: A firm is considering a project that will generate perpetual after-tax cash flows of $35,000 per year beginning next year. The project has the same risk as the firm's overall operations and must be financed externally. Equity flotation costs 15% and debt issues cost 7% on an after-tax basis. The firm's D/E ratio is 1.2. What is the most the firm can pay for the project and still earn its required return?

Reference no: EM132462459

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