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2. A firm wants to start a project that needs a $10 million investment. It has decided to fund it with equity only: $6 million
2. A firm wants to start a project that needs a $10 million investment. It has decided to fund it with equity only: $6 million with retained earnings and the rest with new common stock. The firm just paid dividends of $3 per share on its common stock. The growth rate of the dividends is expected to be 4%. The stock price =$75. The flotation cost =12%. What is the WACC for this project? a. 8.16% b. 8.73% c. 8.44% d. 8.22% e. 8.39%
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