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Minden Co. had $500,000 of equity share capital, on which the return was 16%, and $1,500,000 of debt, on which the interest rate was 10%.
Minden Co. had $500,000 of equity share capital, on which the return was 16%, and $1,500,000 of debt, on which the interest rate was 10%. The tax rate was 40%. The weighted average cost of capital was O 15.6% 13% 12% 8.5% 6.55 Ontario Inc. is considering investing in two projects, each of which has an intial investment requirement of $100,000. Both projects A and Bare "normal" risk for the company Project A has a net present value of $25,000. Project has a net present value of $20,000. Which of the statements below is true? Project is better than Project A because of the risk Project A is better than Project because it has a higher net present value and the Projects A and Bare equally valuable There is insufficient information to make a rational choice between Project A and Project one of the above
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