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Business, 08.01.2020 02:31 bhjbh7ubb

Hankins, inc., is considering a project that will result in initial aftertax cash savings of $7 million at the end of the first year, and these savings will grow at a rate of 3 percent per year indefinitely. the firm has a target debt–equity ratio of .69, a cost of equity of 13.4 percent, and an aftertax cost of debt of 6.4 percent. the cost-saving proposal is somewhat riskier than the usual project the firm undertakes; management uses the subjective approach and applies an adjustment factor of 3 percent to the cost

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Hankins, inc., is considering a project that will result in initial aftertax cash savings of $7 mill...
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