Question
Firm A has only debt and equity in the firm. It has a WACC of 12%. Its after tax cost of debt is 5%. The
Firm A has only debt and equity in the firm. It has a WACC of 12%. Its after tax cost of debt is 5%. The stock has a beta of 2. If market return is 10% and risk free rate is 5%, find the percentage of capital financed by equity in the firm.
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Fundamentals of Corporate Finance
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford, David A. Stangeland, Andras Marosi
1st canadian edition
978-0133400694
