Evaluate the following four projects to determine their acceptance (or rejection) by firms A and B. What do the results of this evaluation tell you about leverage in a world with corporate taxes but no personal taxes? (Note: rjm is the correlation between the unlevered free cash flows of each project and the market.) 2 Project j Cost j sj E(NOIJ) Rjm Correlation of j with (After-tax) the market 1 110 8 0.10 0.6 2 125 12 0.11 0.7 3 85 9 0.12 0.8 4 170 20 0.20 0.9
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