Question
A company has the following capital structure: D/E ratio = 0.2, Equity Beta = 1.06, Cost of Debt = 7.9%. The CEO proposes a new
A company has the following capital structure: D/E ratio = 0.2, Equity Beta = 1.06, Cost of Debt = 7.9%. The CEO proposes a new leverage, expressed by a target D/E ratio of 0.77. What would be the firm's new WACC? Assume that the marginal tax rate is 40%, risk-free rate is 3.8%, market risk premium is 5.9%, and that debt is risk less.
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Essential Mathematics For Economic Analysis
Authors: Knut Sydsaeter, Peter Hammond, Arne Strom
4th Edition
0273760688, 9780273760689
