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1. RM is an all-equity firm, value of equity is $2 million. Cost of unlevered equity is 18%. It plans to issue $400,000 debt and
1. RM is an all-equity firm, value of equity is $2 million. Cost of unlevered equity is 18%. It plans to issue $400,000 debt and use the proceeds to repurchase stock. Cost of debt is 10%.
- After the repurchase, what is firms overall cost of capital, WACC?
- After the repurchase, what is the cost of equity?
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