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Calgary Industries. Inc. is considering a new project that costs S25 million. The project will generate after-tax cash flows of $7 million for five years. The firm has a debt-equity ratio of .75. The cost of equity is 15 percent and the cost of debt is 9 percent. The corporate tax rate is 35 percent. It appears that the project has the same risk as the overall firm. Should Calgary take on the project? Why or why not?

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Financial Management, Finance

Category:- Financial Management
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