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Answer in excel please with all info 6. Macbeth Spot Removers is entirely equity financed. Use the following information. Data 2,200 34 Number of shares
Answer in excel please with all info
6. Macbeth Spot Removers is entirely equity financed. Use the following information. Data 2,200 34 Number of shares Price per share Market value of shares Expected operating income $ 74,800 11,220 $ Return on assets 15% Macbeth now decides to issue $37,400 of debt and to use the proceeds to repurchase stock. Suppose that Ms. Macbeth's investment bankers have informed her that since the new issue of debt is risky, debtholders will demand a return of 11.3%, which is 2.7% above the risk-free interest rate. Assume corporate tax rate is zero. A. What are the company's overall cost of capital after the debt issue? B. What is the cost of equity after the debt issue? C. Suppose that the beta of the unlevered stock was 0.60. What will BA, BE, and BD be after the change to the capital structureStep by Step Solution
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