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A firm is considering an average - risk project with an IRR of 8 % . The firm's cost of debt ( KD ) is

A firm is considering an average-risk project with an IRR of 8%. The firm's cost of debt (KD) is 6%, its cost of equity (KE) is 13%, and its tax rate (t) is 22%. The target debt ratio (D/(D+E)) for the project, in market values, is 0.5. The firm should
-reject the project regardless of the financing method
-accept the project regardless of the financing method
-accept the project only if it can be financed entirely with equity
-accept the project only if it can be financed entirely with debt

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