Business, 27.04.2021 15:10 memorybuxton

Och, Inc., is considering a project that will result in initial aftertax cash savings of $1.85 million at the end of the first year, and these savings will grow at a rate of 3 percent per year indefinitely. The company has a target debt-equity ratio of 0.65, a cost of equity of 11 percent, and an after tax cost of debt of 4.3 per cent. The cost saving proposal is somewhat riskier than the usual projects the firm undertakes; management uses the subjective approach and applies an adjustment factor of 2 percent to the cost of capital for such risky projects. Should the company accept the project

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Och, Inc., is considering a project that will result in initial aftertax cash savings of $1.85 milli...

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