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Unformatted text preview: total. The equity beta of the corporation is 1.2. The T-bill rate is 4% and the S&P500 return is 12%. Your most recent dividend was $2.21. You expect a constant growth rate of 2% forever and the stock is currently trading at $27. The flotation costs for equity will be $80,000 total. The CEO believes this project falls under the Risky category and would like you to adjust the discount rate upward by adding 3% to the WACC. The tax rate is 35%. Is this a good project? Please support your answer with an NPV calculation....
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This note was uploaded on 10/12/2008 for the course BUAD 310 taught by Professor Lv during the Spring '07 term at USC.
- Spring '07