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The Alto Horns Corp. is planning on introducing a new line of clarinets. They expected...

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Accounting

The Alto Horns Corp. is planning on introducing a new line of clarinets. They expected EBIT is $700,000. The unlevered cost of equity is 15%. The firm plans to raise $1,000,000 as 10% interest perpetual debt. Assume depreciation, net working capital, and investment cash flows are 0. The corporate tax rate is 30%. Which of the following represents the correct annual cash flows to be used under the WACC method?"

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