Question: Sarvon Systems has a debt equity ratio of 1 2 an equity

Sarvon Systems has a debt-equity ratio of 1.2, an equity beta of 2.0, and a debt beta of 0.30. It currently is evaluating the following projects, none of which would change the firm’s volatility (amounts in $ million):

a. Which project will equity holders agree to fund?
b. What is the cost to the firm of the debtoverhang?
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  • CreatedAugust 06, 2014
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