A Corporation is considering a capital project for the comin
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A Corporation is considering a capital project for the coming year.
The project has an internal rate of return of 17 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 .40 10%
Preferred stock .10 15%
Common stock equity .50 20%.
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The solution provides full calculations for a corporation considering a capital project.
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