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Barley Inc. just hired you as their financial analyst. The company is thinking of expanding into a new product line that requires a new piece
Barley Inc. just hired you as their financial analyst. The company is thinking of expanding into a new product line that requires a new piece of equipment and wants your opinion. Here's the info:
Average return in the stock market is currently The risk free rate is Barley Inc. has a current beta of
Barley Inc. has one bond currently outstanding that is selling for a premium, at The bonds have a annual coupon rate and pay interest annually. Assume $ par value and years remaining to maturity.
Barley Inc. must maintain at least a equity to total asset ratio or face default on the bonds. The company has a tax rate.
The project has an initial cost of $ The equipment will have no salvage value at the end of the project in years.
You did a proforma income statement and came up with the following net income figures:
Year
Year
Year
Year
Year
What is the IRR?
a
b
c
d
e None of the above is the answer.
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