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An unlevered firm's assets have a beta of 1.40, and the firm's value is $150 million. The firm plans to raise capital by issuing bonds

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An unlevered firm's assets have a beta of 1.40, and the firm's value is $150 million. The firm plans to raise capital by issuing bonds valued at $75 million. The firm's cost of debt is 6.15% and the debt will have a beta of O. If the expected return on the market is 7.50% and the risk-free rate is 2.35%, calculate the expected return of the equity for the firm after it has added debt to its capital structure. Assume that the tax rate is 22%. 11.431% 11.740% 12.985% O 11.101%

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