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6. (20 points)World-Wide Enterprises (WWE) is planning to enter into the business of PC manufacturing. IBM is a typical firm in this industry, and can

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6. (20 points)World-Wide Enterprises (WWE) is planning to enter into the business of PC manufacturing. IBM is a typical firm in this industry, and can be used as a reference. WWE has a D/E of 0.7, IBM has a D/E of 0.4. Borrowing rate for WWE is 12 %, while borrowing rate for IBM is 10%. Given Market risk premium is 8 %, risk-free rate is 5%, and corporate tax rate 34%, what is the appropriate discount rate for WWE to use for its PC venture

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