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3) (20 points) A company's equity is valued at $10 million and debt is valued at $2 million. Its bonds trade at the risk-free rate

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3) (20 points) A company's equity is valued at $10 million and debt is valued at $2 million. Its bonds trade at the risk-free rate of 2%. If its WACC is 12.2% and its CAPM equity beta is 0.8, what must be the expected rate of return on market portfolio? Assume that tax rate is 40%. 4) (10 points) Discuss similarities and differences between seasoned offerings and right issues for stocks

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