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Unformatted text preview: flows are reinvested at the cost of capital. To see this graphically, think of the following situation: assume the firm's cost of capital is a constant 10% within the relevant range of financing considered, and it has projects available as shown in the graph below: P e r c e n t D o l l a r s R a i s e d a n d I n v e s t e d M C C I R R A = 2 5 % I R R B = 2 0 % I R R C = 1 5 % I R R D = 1 2 % I R R E = 8 % I R R F = 5 % 5 20 25 15 10 Mini Case: 11 - 36...
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.
- Spring '08