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Business, 16.12.2019 20:31 AbbyNeil

Consider a project with free cash flows in one year of $90,000 in a weak economy or $117,000 in a strong economy, with each outcome being equally likely. the initial investment required for the project is $80,000, and the project's cost of capital is 15%. the risk-free interest rate is 5%.suppose that to raise the funds for the initial investment the firm borrows $80,000 at the risk free rate, then the cash flow that equity holders will receive in one year in a weak economy is closest to: a) $6,000b) $10,000c) $0d) $33,000

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Consider a project with free cash flows in one year of $90,000 in a weak economy or $117,000 in a st...
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