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Calculate the cost of equity in a levered firm. The cost of equity before the firm issues debt is 10% the cost of debt is

Calculate the cost of equity in a levered firm.

The cost of equity before the firm issues debt is 10%

the cost of debt is 7%

tax rate is 40%.

The firm has 100,000 outstanding shares at $10 per share

- 1,000 outstanding bonds, each of which is quoted at 100$.

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