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3. Assume we are in the M&M world. Myfirm Inc. is an all equity firm with a cost of capital of 12%. The new CEO,

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3. Assume we are in the M&M world. Myfirm Inc. is an all equity firm with a cost of capital of 12%. The new CEO, thinking that debt is cheaper than equity, borrows some funds to increase the Debt/Equity ratio to 25%. If Kd =6%, the new Ke and WACC, respectively, will be: A. B. C. D. E. 13.25% and 12% 20% and 12.25% 12% and 20% Unchanged. 13.5% and 12%

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