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A firm currently has 20M in debt and 107M in equity. Its cost of debt is 3.9%, tax rate of 39%, and the Beta of
A firm currently has 20M in debt and 107M in equity. Its cost of debt is 3.9%, tax rate of 39%, and the Beta of 2.0. Current market conditions indicate that the risk-free rate is 2.3% and the expected return on the market is 12.8%. If the firm were to increase its weight of debt by 16%, what would be the change in its WACC? Assume that the cost of debt and equity do not change
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