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Ditee Corp. has no debt but can borrow at 3%. The firms WACC is currently 7%, and the tax rate is 20 percent. (a) What
Ditee Corp. has no debt but can borrow at 3%. The firms WACC is currently 7%, and the tax rate is 20 percent. (a) What is the companys cost of equity? (b) If the firm converts to 50% debt (i.e.,50% debt-to-value ratio), what will its cost of equity be? (c) If the firm converts to 50% debt (i.e.,50% debt-to-value ratio), what is the companys WACC?
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