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Business, 01.11.2019 06:31 cbogrett

Speedy delivery systems can buy a piece of equipment that is anticipated to provide an 7 percent return and can be financed at 4 percent with debt. later in the year, the firm turns down an opportunity to buy a new machine that would yield a 11 percent return but would cost 13 percent to finance through common equity. assume debt and common equity each represent 50 percent of the firm’s capital structure.

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