Gnomes r us is considering a new project the company has a, Ask an Expert

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Gnomes R Us is considering a new project. The company has a debt-equity ratio of .72. The company’s cost of equity is 14.7 percent, and the aftertax cost of debt is 8 percent. The firm feels that the project is riskier than the company as a whole and that it should use an adjustment factor of +2 percent.

What is the company’s WACC?

What discount rate should the firm use for the project?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91618692

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