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Unformatted text preview: formation for three projects being considered by an all‐equity firm called All Equity Inc. All Equity Inc's stock beta is 1.2, the risk‐free rate is 8%, and the market risk premium is 8.5%. Which of the following projects should be accepted? Project
A B C Beta
0.65 0.90 1.40 IRR 12%
19% 4. Tricky Instruments Inc. (TII) has a project that requires an initial investment of $190 million. TII's target D/E ratio is 0.5, flotation costs for equity are 6% and for debt are 3%. What is the true cost (in dollars) of the project when flotation costs are inc...
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This note was uploaded on 11/30/2012 for the course HADM 2220 taught by Professor Moulton during the Fall '12 term at Cornell University (Engineering School).
- Fall '12