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Assuming no market imperfections or taxes, a firm is currently all equity financed. The expected return on the equity is 10%. The firm plans to

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Assuming no market imperfections or taxes, a firm is currently all equity financed. The expected return on the equity is 10%. The firm plans to switch to being 25% debt financed by issuing debt and paying the proceeds in a dividend. Assuming the debt will have expected returns of 6%, what number below is the closest to the new expected return on equity

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