Firm AAA is financed with (market values) 200 debt and 300 equity. Cost of debt is 6%,
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Question:
Year 0 - 100
Year 1 40
Year 2 50
Year 3 60
Assume that this new project is of average risk for AAA and that the firm wants to hold constant its debt to equity ratio. AAA's unlevered cost of capital is closest to?
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