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Assuming perpetual cash flows in Case II - Proposition I EBIT = $50 million; Tax rate = 21%; Debt = $100 million; Cost of debt

Assuming perpetual cash flows in Case II - Proposition I

EBIT = $50 million; Tax rate = 21%; Debt = $100 million; Cost of debt = 9%; Unlevered cost of capital = 12%

Using the information from above, what is the cost of equity and the WACC (return on assets = RA)?

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Foundations of Finance The Logic and Practice of Financial Management

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