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Assuming the market is perfect and a firm has only one project that requires an initial investment of $100,655. The project free cash flows in
Assuming the market is perfect and a firm has only one project that requires an initial investment of $100,655. The project free cash flows in one year is either $137,022 or $188,017, with each outcome being equally likely. The project's cost of capital is 20%. The risk-free interest rate is 5%. If the project is finance by both debt and equity where the firm can borrow $100,655 at the risk-free interest rate. The cost of the levered equity is closest to: O A. 55.096 OB.5.09 OC. 63.496 OD. 20.096
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