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A company currently has a 1.5 debt-to-equity ratio. Its cost of debt is 8% and cost of equity is 14%. The tax rate is 34%.

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A company currently has a 1.5 debt-to-equity ratio. Its cost of debt is 8% and cost of equity is 14%. The tax rate is 34%. What will happen to its WACC if the debt ratio is lowered to 30%? Assume the marginal corporate tax rate is 30%. The firm has no debt in its capital structure. It is valued at $100 million. What would be the value of the firm if it issued $50 million in perpetual debt and repurchased the same amount of equity

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