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Please include work, steps and formulas. a a 14. A company has a beta () of 0.91. Its debt and equity weights, Wa and we
Please include work, steps and formulas.
a a 14. A company has a beta () of 0.91. Its debt and equity weights, Wa and we are 30% and 70%, respectively. The corporate income tax rate is 21%. Newly issued bonds must yield 7.1%. Assume a risk-free rate of 4.3% and an expected return on the market of 11.7%. What would be the return required on a proposed project with a beta () of 1.43? (Hint: find the equation which expresses the hurdle rate for capital projects as a function of beta (B)). (15) Step by Step Solution
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