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How much additional debt must the firm issue

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Question: You are a financial manager at ABC Corp. and are trying to assess the following project. The project will require a $250 million initial investment and will generate free cash flows in years 1-4 as shown in the table below. ABC Corp maintains a constant debt-to-enterprise value ratio of 25% and its current WACC is 13.6%. Assuming that ABC Corp. takes the project, how much additional debt must the firm issue in order to maintain a constant debt-to-enterprise value ratio of 25%?

Reference no: EM132754998

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