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Messan Co. (a U.S. firm) borrows U.S. funds at an interest rate of 10% per year. Its beta is 1.0. The long-term annualized risk-free rate
Messan Co. (a U.S. firm) borrows U.S. funds at an interest rate of 10% per year. Its beta is 1.0. The long-term annualized risk-free rate in the United States is 6%. The stock market return in the United States is expected to be 16% annually. Messan`s target capital structure is 40% debt and 60% equity. Messan Co. is subject to a 30% corporate tax rate. Estimate the cost of capital to Messan Co.
Messan Co. (a U.S. firm) borrows U.S. funds at an interest rate of 10% per year. Its beta is 1.0. The long-term annualized risk-free rate in the United States is 6%. The stock market return in the United States is expected to be 16% annually. Messan`s target capital structure is 40% debt and 60% equity. Messan Co. is subject to a 30% corporate tax rate. Estimate the cost of capital to Messan Co.
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