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Logic Legal Leverage (LLL) is evaluating a project that has abeta coefficient equal to 1.3. The risk- free rate is 3 percent andthe market risk pre- mium is 6 percent. The project, which requiresan investment of $405,000, will generate $165,000 after-taxoperating cash flows for the next three years. Should LLL purchasethe project? Excuse me, but I am stumped on this and the answerlisted feels incorrect to me. Any thoughts?
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