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A proposed capital project will cost $20 million and generate $4 million annually in after-tax cash flows for 10 years. the firm has the following
A proposed capital project will cost $20 million and generate $4 million annually in after-tax cash flows for 10 years. the firm has the following sources of funds and corresponding required rates of return: $5 million common stock at 16%, $500000 preferred stock at 10%, and $3 million debt at 9%. All amounts are listed at market values and the firm's tax rate is 35%. Required: Should the project be accepted? Why or why not? Show supporting calculations
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