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XYZ corporation is considering a capital project for the coming year. The project has an internal rate of return of 14 percent. If the firm

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XYZ corporation is considering a capital project for the coming year. The project has an internal rate of return of 14 percent. If the firm has the following target capital structure and costs, what should their decision be and why? Source of Capital Proportion After-Tax Cost Long-term debt 0.40 10% Preferred stock 15% Common stock equity 20% 0.10 0.50

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