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Consider an all-equity-financed firm with perpetual cash flows from assets currently in place of $500 per annum. This firm has 1000 shares outstanding. An investment
Consider an all-equity-financed firm with perpetual cash flows from assets currently in place of $500 per annum. This firm has 1000 shares outstanding. An investment project is available at time period 1 which will cost $500 and will return 10% per annum in perpetuity. Given that the shareholder's required rate of return is 10% per annum, show the irrelevance of the dividend decision.
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