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64 The Norris Co. has an improved version of its hotel stand. The investment cost is expected to be $72 million and will return $13.5
64
The Norris Co. has an improved version of its hotel stand. The investment cost is expected to be $72 million and will return $13.5 million for 5 years in net cash flows. The ratio of debt to equity is 1 to 1. The cost of equity is 13%, the cost of debt is 9%, and the tax rate is 34%. The appropriate discount rate, assuming average risk, is:
8.65% | |
10.5% | |
9.47% | |
9% | |
13% |
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