Sub: Finance Topic: Cost of Capital
Determining cost of equity and weighted average cost of capital?
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Suppose a firm has no debt and $100,000,000 in equity capital. It has a tax rate of 40%, a required rate
of return (by investors) of 9.5% and a β = 1.23. The firm can issue $50,000,000 of debt at a rate of 7.2%.
The risk free rate is 2% and the e