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We have a company that is considering making an investment in a new factory. The financial manager makes the following assumptions: Extra free cash flow
We have a company that is considering making an investment in a new factory. The financial manager makes the following assumptions: Extra free cash flow realized by the end of the first year is $28,473 The free cash flow grows by 6.6% per year (after the first year) Cost of Equity: 18.8% Cost of Debt: 9.9% Tax Rate: 45% Company's target debt equity ratio is 1/2. If the financial manager uses the WACC approach, what will s/he recommend this investment to maximally cost
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