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Jinx, Inc. is a 100% equity-financed firm with a beta of 0.6. The company's CFO is analyzing the firm's capital structure, and he recommends
Jinx, Inc. is a 100% equity-financed firm with a beta of 0.6. The company's CFO is analyzing the firm's capital structure, and he recommends that the firm issue sufficient debt in order to attain a market debt-equity ratio of 0.75. Using a market risk premium of 9%, a risk-free rate of 3%, and a tax rate of 24%, what would be the required return on equity following this capital restructuring?
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
