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If the current capital structure of a firm is 20% debt and 80% equity, the tax rate is 40%, the WACC is 12%, and the
If the current capital structure of a firm is 20% debt and 80% equity, the tax rate is 40%, the WACC is 12%, and the required return on debt is 5%, what is the required return on equity? If the risk free rate is 2% and the expected return on the market is 10%, what is the firms equity Beta? If the firm issues debt and buys back equity so that the % debt is 40%, what is the new Beta on equity and what is the new required return on equity?
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