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Cullumber Resources Company is currently an all-equity firm with a WACC of 16 percent and a 40 percent marginal tax rate. Cullumber wants to move
Cullumber Resources Company is currently an all-equity firm with a WACC of 16 percent and a 40 percent marginal tax rate. Cullumber wants to move to a capital structure with $460 million of debt outstanding at an interest rate of 6 percent and a market value of equity equal to $1,380 million outstanding. Using M&M Proposition 2 with taxes, Equation 16.5, what is the expected return on equity at the new capital structure? (Round answer to 1 decimal place, e.g. 17.5%.)
Expected return on equity | enter the expected return on equity in percentages rounded to 1 decimal place % |
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