Question
1.Assume that capital markets are perfect . A firm finances its operations via $60 million in stock with a required return of 15% and $40
1.Assume that capital markets are perfect. A firm finances its operations via $60 million in stock with a required return of 15% and $40 million in bonds at 8%. Assume the company can use the proceeds to retire $10 million worth of equity,
(a) what would happen to the firms WACC?
(b) What would happen to the required return on the companys stock?
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Introduction to Corporate Finance What Companies Do
Authors: John Graham, Scott Smart
3rd edition
9781111532611, 1111222282, 1111532613, 978-1111222284
