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A firm has 30 million shares outstanding that are trading at $15 per share. The firm issued bonds whose market value is $150 million. The
- A firm has 30 million shares outstanding that are trading at $15 per share. The firm issued bonds whose market value is $150 million. The corporate tax rate is 40%. Assuming the firms cost of equity is 10% and its cost of debt is 5%:
- (a) What is the firms Pre-tax WACC (Unlevered Cost of Equity, Return on Assets)?
- (b) What is the firms WACC?
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A First Course in Quantitative Finance
Authors: Thomas Mazzoni
1st edition
9781108411431, 978-1108419574
