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Arden Corporation is considering an investment in a new project with an unlevered cost of capital...

Arden Corporation is considering an investment in a new project with an unlevered cost of capital of 9.2 %. ​Arden's marginal corporate tax rate is 36 %​, and its debt cost of capital is 4.7 %. a. Suppose Arden adjusts its debt continuously to maintain a constant​ debt-equity ratio of 0.5. What is the appropriate WACC for the new​ project? b. Suppose Arden adjusts its debt once per year to maintain a constant​ debt-equity ratio of 0.5. What is the appropriate WACC for the new project​ now? c. Suppose the project has free cash flows of $ 9.7 million per​ year, which are expected to decline by 2 % per year. What is the value of the project in parts ​(a​) and ​(b​) ​now?

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
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