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Mesa Media is evaluating a project to help increase sales. The project costs $630,000 and has an IRR equal to 15 percent, The project is

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Mesa Media is evaluating a project to help increase sales. The project costs $630,000 and has an IRR equal to 15 percent, The project is divisible, which means any poition can be purchased, Mesa can raise up to 588,000 in new debt at a before tax cost (rd) equal to 7 percent additional debt will cost 10 percent before taxes. Mesa expects to retain $424,000 of its eatnings this year to support the purchase of the project. Mesa's cost of retained earnings is 16 percent, and its cost of new common equity is 18 . percent. Its target eapital structure consists of 20 percent debt and B0 percent common equity. If Mesa's marginal tax rate is 40 percent, how much of the project sheuld bit purchased? Mound your answer to the nearest dellar, 5

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