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T Floor-mart is an all equity firm with a current cost of (equity) capital of 16%. The risk-free rate is 6%, and the market risk

T Floor-mart is an all equity firm with a current cost of (equity) capital of 16%. The risk-free rate is 6%, and the market risk premium is 10%. Floor-mart is considering a new project that has 50% more beta risk than the firms assets currently have. The IRR on the new project is 20%. What is the cost of capital for the project? Should the project be accepted?

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