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Suppose that UK Motors Ltd. is considering an investment of 30 million to develop a new factory. Assume that the companys stockholders require a 22%
Suppose that UK Motors Ltd. is considering an investment of 30 million to develop a new factory. Assume that the companys stockholders require a 22% rate of return, that the companys bondholders require a 9% rate of return, that the UK corporate tax rate is 40%, that 35% of the project will be financed by debt, and that 65% of the project will be financed with equity. What must be the annual income from the project if it is to be a zero net present value investment?
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