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ANSWERS MUST BE IN EXCEL OR THEY WILL NOT BE ACCEPTED!! Please show formulas. 1. Rocky Mountain Inc. is all-equity-financed. The expected rate of return

ANSWERS MUST BE IN EXCEL OR THEY WILL NOT BE ACCEPTED!! Please show formulas.

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1. Rocky Mountain Inc. is all-equity-financed. The expected rate of return on the company's shares is 14.75%. A. What is the opportunity cost of capital for an average-risk Rocky Mountain investment? B. Suppose the company issues debt, repurchases shares, and moves to a 38% debt-to- value ratio (DIV = 0.38). What will be the company's weighted average cost of capital at the new capital structure? The borrowing rate is 9.25% and the tax rate is 21%. 1. Rocky Mountain Inc. is all-equity-financed. The expected rate of return on the company's shares is 14.75%. A. What is the opportunity cost of capital for an average-risk Rocky Mountain investment? B. Suppose the company issues debt, repurchases shares, and moves to a 38% debt-to- value ratio (DIV = 0.38). What will be the company's weighted average cost of capital at the new capital structure? The borrowing rate is 9.25% and the tax rate is 21%

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