Matthew Lewis, Incorporated estimates that its break point (BPRE) is $18 million, and its WACC is 11.45 percent if commo

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answerhappygod
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Matthew Lewis, Incorporated estimates that its break point (BPRE) is $18 million, and its WACC is 11.45 percent if commo

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Matthew Lewis, Incorporated estimates that its break point(BPRE) is $18 million, and its WACC is 11.45 percent ifcommon equity comes from retained earnings. However, if thecompany issues new stock to raise new common equity, itestimates that its WACC will rise to 12.25 percent.The company is considering the following equal-life investmentprojects:
What is the firm's optimal capital budget?
Answer Options:
$21 million
$20 million
$18 million
$19 million
None of the above
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