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  • 3 years ago

Cost of the equipment is $2 million. It is estimated that the aftertax cash inflows from the project will be $210,000 annually in perpetuity. The market value debt-to-assets ratio is 40%. The firm's cost of equity is 13%, its pretax cost of debt is 8%.The tax rate is 34%. If the debt to assets ratio is 40% as stated above, how would i determine equity?

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