For a particular firm, the value of its debt is $3,000 and the expected free cash flow
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For a particular firm, the value of its debt is $3,000 and the expected free cash flow on all future dates forever is $1,100. Given the firm’s risk exposure, the unlevered cost of equity capital is 13.80%. The cost of debt is 8.50%. The corporate tax rate is 33.00%. Plot the cost of equity, the weighted average cost of capital (WACC), the after-tax unlevered cost of equity, and the after-tax cost of debt against the debt / equity ratio
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