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What rate of return for the equity investors

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Problem 1: You are considering raising dollars to invest in a project that requires an investment today of $1,000; it is a one-period project with an IRR of 11%. You will raise the dollars using a 40% debt to total assets capital structure. Debt dollars will cost 6% before tax, and equity dollars will cost 12%. Your tax rate is 30%. Is the project acceptable? Support this answer. Accepting the project would result in what rate of return for the equity investors?

Reference no: EM132968583

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