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QUESTION $3.$ The Carpet Company's shareholders require an $11\%$ return on their investment, and stock comprises $50\%$ of the company's capital structure. The other half of the company's capital structure is comprised of debt. The interest rate on this debt is $7\%.$ Assume the corporate tax rate is $21\%.$ What is carpet company's WACC?

ANSWER: $q,$

QUESTION $4.$ Assume the Carpet Company's corporate tax rate falls to $0\%.$ The company borrows money to buy back and retire half of its outstanding common stock. What happens to the company's WACC?

ANSWER:

Question $1$

Question $2$

Questions $3$ and $4_{?}$

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