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Assume M&M holds and there are no corporate taxes. Suppose you know that all equity firms in the grocery store business have a required return

Assume M&M holds and there are no corporate taxes. Suppose you know that all equity firms in the grocery store business have a required return of equity of 10%. If Kroger (a grocery store) is 25% debt and 75% equity financed, what do you expect Krogers return to equity to be?

Lower than 10%

Exactly 10%

Greater than 10%

None of the above

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