Question
A pure equity firm. Firms decides to recapitalize to take advantage of tax shield. Firms' marginal tax rate is 40%, After a substantial borrowing, firm's
A pure equity firm. Firms decides to recapitalize to take advantage of tax shield. Firms' marginal tax rate is 40%, After a substantial borrowing, firm's cost of equity goes up to 10%, Assuming that firm's asset beta is 0.9, risk free rate is 2%, and EMRP is 5%? estimate firm's post-recaitalization debt ratio
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Survey Of Economics, Principles, Applications, And Tools
Authors: Arthur O'Sullivan, Steven M. Sheffrin, Stephen J. Perez
5th Edition
0132556073, 978-0132556071
