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The project requires 210 thousand dollars in investment to construct a temporary office complex that will produce a cash flow of 60 thousand dollars annually
The project requires 210 thousand dollars in investment to construct a temporary office complex that will produce a cash flow of 60 thousand dollars annually for 5 years and thirty thousand dollars in the project's final year (year six). At the end of year six, the contractors will purchase the temporary structure for fifty thousand dollars. The weighted average cost of capital (WACC) is this project's required rate of return (RRR). The company has a capital structure of 40% debt and 60% equity. The after-tax cost of debt is 7% after a 2% adjustment, and the equity stakeholders require a 12% return for any new investments
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