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Business, 16.12.2019 20:31 mv603177

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 project is sold to investors as an all-equity firm. the equity holders will receive the cash flows of the project in one year. the market value of the unlevered equity for this project is closest to: a) $94,100b) $90,000c) $86,250d) $98,600

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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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