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2. Suppose the annual return in the stock market is 8%. Suppose company Z has no debt, the risk-free rate is 2% and the beta
2. Suppose the annual return in the stock market is 8%. Suppose company Z has no debt, the risk-free rate is 2% and the beta for Z is 1.15. Managers have proposed a new project whose projected cash are $5 million each year for the next five years. There is no projected residual value. What is the most the firm should invest in this project?
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