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Mantap Industries has three projects under consideration. Project L is a lower-than-averagerisk project, project A is an average-risk project, and project H is a higher-than-average-risk project. You have gathered the following information to determine if one or more of these projects has an acceptable rate of return for the firm. • Sources of financing 50% debt and 50% equity • Rd = 8.00% before taxes • Tax Rate = 30% • Average beta for Mantap Industries = 1.0 • Rm = 13.00% • Rf = 4.00% • Adjusted WACC = 9.30% • Beta for project L = 0.80, for project A = 1.00, and for project H = 1.20 • IRRL = 9.00%, IRRA = 10.00%, and IRRH = 11.00% Calculate the required rate of return for each project and determine which, if any, projects are acceptable to the firm

Mantap Industries has three projects under consideration. Project L is a lower-than-averagerisk project, project A is an average-risk project, and project H is a higher-than-average-risk project. You have gathered the following information to determine if one or more of these projects has an acceptable rate of return for the firm. • Sources of financing 50% debt and 50% equity • Rd = 8.00% before taxes • Tax Rate = 30% • Average beta for Mantap Industries = 1.0 • Rm = 13.00% • Rf = 4.00% • Adjusted WACC = 9.30% • Beta for project L = 0.80, for project A = 1.00, and for project H = 1.20 • IRRL = 9.00%, IRRA = 10.00%, and IRRH = 11.00% Calculate the required rate of return for each project and determine which, if any, projects are acceptable to the firm

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Mantap Industries has three projects under consideration. Project L is a lower-than-averagerisk project, project A is an average-risk project, and project H is a higher-than-average-risk
project. You have gathered the following information to determine if one or more of these
projects has an acceptable rate of return for the firm.
• Sources of financing 50% debt and 50% equity
• Rd = 8.00% before taxes
• Tax Rate = 30%
• Average beta for Mantap Industries = 1.0
• Rm = 13.00%
• Rf = 4.00%
• Adjusted WACC = 9.30%
• Beta for project L = 0.80, for project A = 1.00, and for project H = 1.20
• IRRL = 9.00%, IRRA = 10.00%, and IRRH = 11.00%
Calculate the required rate of return for each project and determine which, if any, projects are acceptable to the firm

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