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An all-equity firm's stockholders currently require a 10 percent return on their investment. One of the directors of the company suggests that the firm can
An all-equity firm's stockholders currently require a 10 percent return on their investment. One of the directors of the company suggests that the firm can lower its weighted average cost of capital by issuing debt since bondholders are only expected to require a 4 percent return. The President of the company asks you to evaluate this argument. What do you say
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