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Assume perfect capital markets. A firm has a market value of $ 3 0 , 0 0 0 and debt of $ 7 , 5

Assume perfect capital markets. A firm has a market value of $

30, 000

and debt of $

7, 500

borrowed at

7 % .

The return on equity is

18 % .

What is the return on equity if the firm was unlevered?

(

Hint: Think about WACC. WACCL

=

WACCU

)

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