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A firm has a capital structure made up of P 2 0 million worth of equity and P 1 0 million worth of debt. The
A firm has a capital structure made up of P million worth of equity and P million worth of debt.
The dividend expected to be paid in the next period is thebe, the aftertax cost of debt is the
current market price is thebe, and the growth rate is
Required:
i Calculate WACC.
ii Given that the firm is contemplating to raise P million in new equity at thebe with floatation
costs of thebe per share, calculate the cost of new equity and MWACC.
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