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Speedy Delivery Systems can buy a piece of equipment that is anticipated to provide an 12 percent return and can be financed at 7 percent
Speedy Delivery Systems can buy a piece of equipment that is anticipated to provide an 12 percent return and can be financed at 7 percent with debt. Later in the year, the firm turns down an opportunity to buy a new machine that would yield a 13 percent return but would cost 16 percent to finance through common equity. Assume debt and common equity each represent 50 percent of the firm
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