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A capital budgeting project will result in an decrease in firm value if which of the following is true? Select one: O A. new financing
A capital budgeting project will result in an decrease in firm value if which of the following is true? Select one: O A. new financing is not available from internal sources O B. the internal rate of return is less than the cost of capital. O C. the internal rate of return is greater than the cost of capital. O D. The firm's debt/equity ratio will increase as a result of the project. After-tax cost of debt is 10.354%, for a $1,000 par value bond that pays $100 per year in interest. The bond will have a 10-year life. The firm is in a 25% tax bracket. What price did the bond sell for at issue (ignore flotation costs)? Select one: O A. 800 O B. 1000 O C. 1100 O D. 979 The weighted average cost of capital for firm X is currently 10%. Firm X is considering a new project but must raise new debt to finance the project. Debt represents 50% of the capital structure. If the after tax cost of debt will rise from 7% to 8%, what is the marginal cost of capital? Select one: O A. 9.00% O B. 11.00% O C. 10.05% O D. 10.5%
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