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A firm is considering a project that will generate perpetual cash flows of$15,000 per year beginning next year. The project has the same risk as
A firm is considering a project that will generate perpetual cash flows of$15,000 per year beginning next year. The project has the same risk as thefirm's overall operations and must be financed externally. Equity costs14% and debt costs4% on anafter-tax basis. Thefirm's D/E ratio is 0.8. What is the most the firm can pay for the project and still earn its requiredreturn?
A. $164,000
B. $157,000
C. $182,00
D. $138,000
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