Question
26. A company has: a geared cost of equity of 12%; an ungeared cost of equity of 10%;,a WACC of 9.25%; market value of equity
26. A company has: a geared cost of equity of 12%; an ungeared cost of equity of 10%;,a WACC of 9.25%; market value of equity of $210 million; market value of debt of $70 million;a tax rate of 30%. The company plans to raise $20 million of debt and use these funds to repurchase shares. According to Modigliani and Millers theory with tax, WACC would move to:
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Financial Institutions Management A Risk Management Approach
Authors: Anthony Saunders, Marcia Cornett, Otgo Erhemjamts
10th Edition
1260013820, 978-1260013825
