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Assume that a company is 35% debt and 65% equity financed. The company has a 10% cost of equity and 8% after-tax cost of debt.
Assume that a company is 35% debt and 65% equity financed. The company has a 10% cost of equity and 8% after-tax cost of debt. It considers undertaking a project which has a life of 5 years. If the cash flows of the project are, on the average, spread evenly over the life of the project, the optimal cutoff period is closest to:
Select one: a. 3.9 years b. 4.2 years c. 5.1 years d. 6.1 years
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