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Apavia Inc is considering a project that is to be financed 50% by equity (cost 16.49%) and 50% by debt (pre-tax cost 11%). The financing method will maintain the company's WACC at its current level. Corporation tax is charged at 32% and the cashflows from the project will be $29,000 per annum in perpetuity. In preparation for applying the APV method to an appraisal of this project, calculate the cost of equity in an equivilently ungeared company (to three decimal places). ________% |