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Toronto Skaters Corporation (TSC) has no budget constraint on new investments. The risk-free rate is ...

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Toronto Skaters Corporation (TSC) has no budget constraint on new investments. The risk-free rate is ...

Toronto Skaters Corporation (TSC) has no budget constraint on new investments. The risk-free rate is 2% and the market risk premium is 6%. What rate of return (discount rate) should TSC use to evaluate the Zulu project?

Project	Beta	CF0	Annual CF	Project Life
Tango	0.8	$80,000	$30,000	4
Foxtrot	1.2	$120,000	$32,000	5
Zulu	1.5	$60,000	$35,000	2
Whiskey	0.9	$150,000	$65,000	3

▸ 8.00%

▸ 11.00%

▸ 8.60%

▸ 6.40%

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Corporate Finance

Edition: 5^th

Author: Booth

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You make an excellent tutor!

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Correct

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Thank you, thank you, thank you!

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