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II-4. Here is YYs market-value balance sheet (figures in $ millions): The debt is yielding 6%, and the cost of equity is 10%. The tax

II-4. Here is YYs market-value balance sheet (figures in $ millions): The debt is yielding 6%, and the cost of equity is 10%. The tax rate is 25%. Investors expect this level of debt to be permanent. (6pts) (1) What is YYs WACC? (Please count to XX.XX%.) (2) How would the market-value balance sheet change if YY retired all its debt?.
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11-4. Here is YY's market-value balance sheet (figures in $ millions): The debt is yielding 6%, and the cost of equity is 10%. The tax rate is 25%. Investors expect this level of debt to be permanent. (6pts) (1) What is YY's WACC? (Please count to XX.XX%.) (2) How would the market value balance sheet change if YY retired all its debt? (65) Assets Net working capital Long-term assets Value of firm Liabilities and Equity $ 800 Debt 2,600 Equity $ 3.400 $ 1,200 2,200 $ 3.400

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