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7. Speedy Delivery Systems can buy a piece of equipment that is anticipated to provide an 7 percent return and can be financed at 5
7. Speedy Delivery Systems can buy a piece of equipment that is anticipated to provide an 7 percent return and can be financed at 5 percent with debt. Later in the year, the firm turns down an opportunity to buy a new machine that would yield a 15 percent return but would cost 17 percent to finance through common equity. Assume debt and common equity each represent 50 percent of the firm's capital structure. (continued on next page) a Compute the weighted average cost of capital (7 points). I b. Which project(s) should be accepted (4 points)
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