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Problem 6 You are given the following information about a project: i) It is expected to generate 6 million per year of revenues perpetually. ii)
Problem 6 You are given the following information about a project: i) It is expected to generate 6 million per year of revenues perpetually. ii) The cost of capital for the project is 12%. iii) The fixed costs of the project are 1 million per year. iv) The variable costs of the project are 15% of revenues. v) The annual effective risk-free rate is 4%. Calculate: a) The value of the project. b) The operating leverage of the project
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