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JKL is an all equity firm. They have a current WACC of 10%. The company is thinking about borrowing some money to buy back some
JKL is an all equity firm. They have a current WACC of 10%. The company is thinking about borrowing some money to buy back some of its outstanding shares. It would borrow until the debt/equity ratio was 1.2. With that amount of debt, its cost of debt capital would be 4%. What will be the expected return on the equity after the transaction is completed?
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