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16. WACC and NPV Och, Inc., is considering a project that will result in initial aftertax the end of the first year, and these savings

16. WACC and NPV Och, Inc., is considering a project that will result in initial aftertax the end of the first year, and these savings will grow a rate of savings 3 percent per year indefinitely. The company has a target debt-equity ratio at of cash of $1.85 million at debt of 4.3. percent. The cost- .65, cost of equity of 11 percent, and an aftertax cost projects of the firm undertakes; manage- proposal is somewhat riskier than the usual saving uses and applies an adjustment factor of +2 percent cost ment of capital the for subjective such risky approach projects. Under what circumstances should the to company the take the project?
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16. WACC and NPV Och, Inc., is considering a project that will result in initial aftertax. cash savings of $1.85 million at the end of the first year, and these savings will grow at a rate of 3 percent per year indefinitely. The company has a target debt-equity ratio of .65, a cost of equity of 11 percent, and an aftertax cost of debt of 4.3. percent. The cost saving proposal is somewhat riskier than the usual projects the firm undertakes, manage- cost of capital for such risky projects. Under what circumstances should the company should use when evaluating its take on the project? Don has the following for

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