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A firm with $ 1,000,000 in assets and 50% debt in its capital structure is considering a $ 250,000 project. The firms after tax weighted average cost of capital is 10.4% the marginal cost of debt is 8% ( before taxes) and the marginal tax rate is 40%. If the project does not change the firms operating risk and is financed exclusively with new equity, what rate of return must it earn to be acceptable?

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