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Palestine Corp. needs to purchase new plastic moulding machines to meet the demand for its product. The cost of the equipment is $3,724,000. It is

Palestine Corp. needs to purchase new plastic moulding machines to meet the demand for its product. The cost of the equipment is $3,724,000. It is estimated that the firm will increase after tax cash flow (ATCF) by $700,601 annually for the next 6 years. The firm is financed with 40% debt and 60% equity, both based on current market values, though the firm has announced that it wants to quickly change its debt to equity ratio to 1.5. The firm's beta is 0.91, the risk free rate is 0.70% and the expected market return is 3.69%. Palestine Corp.'s semi-annual bonds have 14.20% coupons, 16 years to maturity, and a quoted price of 97.168. Assume the firm's tax rate is 34%. The firm's last 5 dividends (the last in the list is D0) are 1.23, 1.26, 1.45, 1.90, and 1.91. Its current market price is $99.31. Question 3, Short Answer C: Assume that there are some large cleanup and disposal costs of $372,400 at the end of the project (in year 7). Explain in a sentence or two how this impacts the calculation of the internal rate of return? Note that no additional calculation is required to answer this question. (10 marks)

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