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What discount rate (weighted average cost of capital) should American Greetings use to analyze the...

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Finance

What discount rate (weighted average cost of capital) should American Greetings use to analyze the cash flows?

  • Use book value of debt as value of debt (Exhibit 45.6).
  • Use market value of equity as value of equity (Exhibit 45.6).
  • Use 10-year government bond yield as risk-free rate.

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