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4. Practice Problem 11-4 eBook Over-the-Top Canopies (OTC) is evaluating two independent investments. Project S costs $150,000 and has an IRR equal to 14 percent,
4. Practice Problem 11-4 eBook Over-the-Top Canopies (OTC) is evaluating two independent investments. Project S costs $150,000 and has an IRR equal to 14 percent, and Project L costs $140,000 and has an IRR equal to 12 percent. OTC's capital structure consists of 20 percent debt and 80 percent common equity, and its component costs of capital are rat = 5%, rs 7%, and re = 9.5%. If OTC expects to generate $220,000 in retained earnings this year, which project(s) should be purchased? Round your answers to one decimal place. = Project WACC Acceptable? S % -Select- L % -Select- Thus, -Select- V should be purchased
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