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A company is considering an investment project that generates a cash flow of $29,000 next year if the economy is favorable but generates only $7,400
A company is considering an investment project that generates a cash flow of $29,000 next year if the economy is favorable but generates only $7,400 if the economy is unfavorable. The probability of favorable economy is 60% and of unfavorable economy is 40%. The project will last only one year and be closed after that. The cost of investment is $20,000, and the company plans to finance the project with $9,500 of equity and $10,500 of debt. Assuming the discount rates of both equity and debt are 0%. What is the expected cash flow to the company's creditors if it invests in the project? $0 $9,260 $10,500 $13,720 $8,140
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