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need help for part b) & c)! 6% Firm ABC's Market Value Balance Sheet ($ Millions) and Cost of Capital Assets Liabilities Cost of Capital
need help for part b) & c)!
6% Firm ABC's Market Value Balance Sheet ($ Millions) and Cost of Capital Assets Liabilities Cost of Capital Cash 0 Debt 200 Debt Other Assets 500 Equity 300 Equity 12% 21% TC I Firm ABC's New Project Free Cash Flows (Millions) Year 0 1 2 3 Free Cash Flows ($100) $40 $50 $60 Assume that this new project is of average risk for Firm ABC and that the firm wants to hold constant debt to equity ratio. a) What is NPV for firm ABC's new project? b) What is the debt capacity for firm ABC's new project in year 0? c) What is the debt capacity for firm ABC's new project in year 1Step by Step Solution
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