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Royal Petroleum Co. can buy a piece of equipment that is anticipated to provide a 9 percent return and can be financed at 6 percent with debt. Later in the year the firm turns down an opportunity to buy a new machine that would yield a 16 percent return but would cost 18 percent to finance through common equity. Assume debt and common equity each represent 50 percent of the firm?s capital structure. a. Compute the weighted average cost of capital. b. Which project(s) should be accepted?

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Hello, this is a project that you have been set to achieve. We are not here to do your homework, you have to study this subject and make your own decisions, that's what study is all about, getting you educated and earning the certificate of proficiency in your chosen subject.

For any of us who have made it in the world to answer this question on your behalf would be unfair to your lecturer or teacher in awarding marks to you for our work.This is cheating! Surely you would want to honestly earn your merit rather than be a sham in life.
Contact your teacher fo help if you don't fully understand how to work this through.

Now please honestly rate our advice to keep us in work doing what we have earned the right to do++++Thanks for using FIXYA

Posted on Sep 13, 2009


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