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B 1. Arro Inc. is a publicly held water filtration company with a debt-to-equity ratio of 1.5, a WACC of 12%, cost of debt of
B 1. Arro Inc. is a publicly held water filtration company with a debt-to-equity ratio of 1.5, a WACC of 12%, cost of debt of 8% and a tax rate of 40%. 1. Calculate the cost of levered equity for Arro Inc. (write to 1 decimal palce without % sign, e.g. 11.5% sould be entered as 11.5) 2. What is the cost of unlevered equity of Arro Inc.? (write to 1 decimal palce without % sign, e.g. 11.5% sould be entered as 11.5) 3. What would be the cost of levered equity if Arro Inc. recapitalizes such that its debt-to-equity ratio becomes 1.0
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