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English, 27.09.2021 18:20 ogpuhl

A firm finances all its investments by 40% debt and 60% equity. The estimated required rate of return on equity is 20% after taxes and that of the debt is 8% after taxes. The firm is considering an investment proposal costing BDT 40,000 with an expected return that will last forever. What amount (in BDT) must the proposal yield per year so that the market price of the share does not change? Show calculations to prove your point.

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