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Ashford
Corporate managerial finance
week 4
BUS 657 Week 4 Chapter 14 Minicase

BUS 657 Week 4 Chapter 14 Minicase

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Chapter 14 Mini Case: The Link between Capital Structure and Capital Budgeting. Review the mini case on page 477 of your text. Complete all requirements of the case. Fiera Corporation is evaluating a new project that costs $45,000. The project will be financed using 40% debt and 60% equity, thus maintaining the firm’s current debt-to-equity ratio. The firm’s stockholders have a required rate of return of 18.36%, and its bondholders expect a 10.68% rate of return. The project is expected to generate annual cash flows of $13,000 before taxes for the next two decades. Fiera Corporation is in the 36% tax bracket.

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