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1. What is the return on Equity Using the CAPM 2. How much is the Weight of Equity(WE) and Debt (WD)? 3. What is the

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1. What is the return on Equity Using the CAPM

2. How much is the Weight of Equity(WE) and Debt (WD)?

3. What is the WACC?

The firm's stock has beta b = 1.4. The expected market return is E(TM) = 10%. The risk-free rate r = 4%. Abracadabra's equity has a market value E = USD10,000. Abracadabra's debt has a market value D = USD 15,000. Abracadabra can borrow new funds at a cost of r. = 6%. Abracadabra's corporate tax rate is Tc = 40%

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