A firm is considering a project with an IRR of 8%. The firms cost of debt if
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Question:
A firm is considering a project with an IRR of 8%. The firms cost of debt if 6%, its cost of equity is 13%, and its marginal tax rate is 23%. The firms debt ratio (D/V) in market value is 0.5, and it proportion of equity (E/V) is also 0.5. The firm should
reject the project regardless of the financing method
accept the project regardless of the financing method
accept the project only if it can be financed entirely with equity
accept the project only if it can be financed entirely with debt
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