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Furniture Depot, Inc., is an all-equity firm with a beta of 0.95.The market-risk premium is 9% and the risk-free rate is 5%.The company must decide
Furniture Depot, Inc., is an all-equity firm with a beta of 0.95.The market-risk premium is 9% and the risk-free rate is 5%.The company must decide whether or not to undertake a project that requires an immediate investment of $1.2 million and will generate annual after-tax cash flows of $340,000 for 5 years with the first cash flow arriving one year after the initial investment.If the project has the same risk as the firm as a whole, should Furniture Depot undertake the project?
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