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1. Please calculate complete a table for WACC with the following assumptions. The interest rate for the unlevered firm is 4.0% and increases 0.3% (30
1. Please calculate complete a table for WACC with the following assumptions. The interest rate for the unlevered firm is 4.0% and increases 0.3% (30 basis points) with a 10% increase in the debt ratio. The corporate tax rate is 21%. The CAPM model is used to calcuate the required return on equity. The unlevered firm has a beta of 0.9 and beta increases 0.02 for every 10% increase in the debt ratio. The risk-free rate of return is 1% and the market-risk premium is 5%. Re Debt/Asset Ratio WACC Interest Rate Beta 0 4.0% 0.1 0.2 0.3 0.4 0.5 0.90 0.92 0.94 0.96 0.98 1.00 1.02 1.04 1.06 1.08 1.10 0.6 0.7 0.8 0.9 0.95
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