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Acetate, Inc., has equity with a market value of $22.6 million and debt with a market value of $11.30 million. Treasury bills that mature in
Acetate, Inc., has equity with a market value of $22.6 million and debt with a market value of $11.30 million. Treasury bills that mature in one year yield 4 percent per year, and the expected return on the market portfolio is 10 percent. The beta of Acetate's equity is 1.11. The firm pays no taxes. What is Acetate's debt-equity ratio? What is the firm's weighted average cost of capital? What is the cost of capital for an otherwise identical all-equity firm
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