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A firms after-tax cost of debt is 3%, and its cost of equity is 10%. It is considering a small project, with a similar risk
A firms after-tax cost of debt is 3%, and its cost of equity is 10%. It is considering a small project, with a similar risk profile to the rest of the firm. The project has up front cost of $7mn in year 0, and results in cash flows to the firm of $7.3mn in year 1 (and no cash flows thereafter). The projects NPV is equal to 0. What is the firms debt-to-equity ratio
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