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Assume you are in a Modigliani Miller world without taxation and with perfect markets. The company follows a constant debt-to-equity policy and has an EBITDA
Assume you are in a Modigliani Miller world without taxation and with perfect markets. The company follows a constant debt-to-equity policy and has an EBITDA that perpetually grows at 3%. The company has a debt to equity ratio equal to 2/3. The wacc of the company is 9.85%. What is the unlevered return on equity of the company if the expected return of debt is 2.35%
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