Question
An all-equity (unlevered) firm's R A = 14%. The cost of debt (R D ) is 10% and the tax rate is 30%. I f
An all-equity (unlevered) firm's RA = 14%. The cost of debt (RD) is 10% and the tax rate is 30%.
If this firm is changed to a firm with 56% equity and the remaining percentage of debt, find the new cost of equity (RE) using the Proposition-II of the 'with tax' model.
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Handbook Of Key Global Financial Markets Institutions And Infrastructure
Authors: Gerard Caprio
1st Edition
0123978734, 9780123978738
