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18. Moose Pastures Inc. (MPI) has perpetual EBIT of $95,000. The firm has a D/E of 1 . The unlevered cost of equity is 12%.

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18. Moose Pastures Inc. (MPI) has perpetual EBIT of $95,000. The firm has a D/E of 1 . The unlevered cost of equity is 12%. The cost of debt is 10%. If the firm has $250,000 of debt in its capital structure, what is the degree of financial leverage of the firm? (Ignore taxes.)

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