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ABC Corporation has an unlevered cost of equity of 16%. Their debt to equity ratio is 0.75, their corporate tax rate is 33%, and their
ABC Corporation has an unlevered cost of equity of 16%. Their debt to equity ratio is 0.75, their corporate tax rate is 33%, and their cost of debt is 4.1%. What is their levered cost of equity according to Modigliani-Miller?
List one correct and one incorrect prediction made by both the Tradeoff and Pecking Order Theories of capital structure.
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