Trump Corp. has no debt but can borrow at 8 percent. The firms WACC is currently 14

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Trump Corp. has no debt but can borrow at 8 percent.

The firm’s WACC is currently 14 percent, and the tax rate is 35 percent.

a. What is Trump’s cost of equity?

b. If the firm converts to 25 percent debt, what will its cost of equity be?

c. If the firm converts to 50 percent debt, what will its cost of equity be?

d. What is Trump’s WACC in part (b)? In part (c)?

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Fundamentals Of Corporate Finance

ISBN: 9780072313000

5th Edition

Authors: Stephen A Ross, Randolph W Westerfield

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Question Posted: May 23, 2024 10:04 AM

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Trump Corp. has no debt but can borrow at 8 percent. The firms WACC is currently 14

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Fundamentals Of Corporate Finance

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