If equity investors require a 20% rate of return, what is the maximum acceptable amount of equity financing for a project with $2 million annual cash flows before tax and interest, $3 million in debt with a 10% coupon, and a 35% tax rate?
A) $5.53 million
B) $5.87 million
C) $8.5 million
D) $9.03 million
Correct Answer:
Verified
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