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Sarvon Systems has a debt-equity ratio of 1.5, an equity beta of 1.8, and a debt beta of 0.26. It currently is evaluating the
Sarvon Systems has a debt-equity ratio of 1.5, an equity beta of 1.8, and a debt beta of 0.26. It currently is evaluating the following projects, E, none of which would change the firm's volatility (amounts in $ millions). a. Which project will equity holders agree to fund? b. What is the cost to the firm of the debt overhang? Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Project A B C D E Investment 95 49 85 28 76 NPV 22 6 11 14 18 Print Done
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