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PLease provide clear answer. VV Corporation is considering an expansion project that requires an initial investment of RM 5 0 million. The project will generate
PLease provide clear answer. VV Corporation is considering an expansion project that requires an initial investment of RM million. The project will generate the following cashflows.
year Cash Flow RM million
The company is eligible to borrow at the following interest rate.
Amount Borrowed RM million Interest Rate
Loans More than
A company similar to VV with debt in its capital structure has a beta of The riskfree rate which is based on an annual fixed deposit rate is while the return of the market is VV currently is in the tax bracket. VV made it a point to accept investment decisions only on projects with positive NPVs
a Determine the appropriate capital structure to finance the project.
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b Recommend whether VV should accept the project.
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