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Question: stanley inc has a new fancy product the investment cost...

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Stanley, Inc. has a new fancy product. The investment cost is expected to be $28 million and will return $8.5 million for 5 years in net cash flows. The ratio of debt to equity (D/E) is 3 to 1. The cost of equity is 14%, the pretax cost of debt is 7.5%, and the tax rate is 25%. The appropriate discount rate, assuming average risk, is:

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