instead of using only debt, you decide to use a combination of debt andequity. You issue a 5-year zero coupon bond for$700. The principal is$1,200.
instead of using only debt, you decide to use a combination of debt andequity. You issue a 5-year zero coupon bond for$700. The principal is$1,200. Theremaining is financed using equity. Theis 1.2, the market portfolio return is 20%,and the risk-free rate is 2%. Taxes are 30%. What is the new WACC and new NPVfor the project? Do you accept or reject?
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Authors: David Hartzell, Andrew E. Baum
2nd Edition
1119526094, 978-1119526094
