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QUESTION
The Hartley Hotel Corporation is planning a major expansion. Hartley is financed 100 percent with equity and intends to maintain this capital...
The Hartley Hotel Corporation is planning a major expansion. Hartley is financed 100 percent
with equity and intends to maintain this capital structure after the expansion. Hartley's beta is 0.9.
The expected market return is 16% and the risk-free rate is 10%. If the expansion is expected to
produce an internal rate of return of 17%, should Hartley make the investment?
