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MNO Inc. is an all equity firm. Its current WACC is 14%. The company is thinking about borrowing some money to buy back some of
MNO Inc. is an all equity firm. Its current WACC is 14%. The company is thinking about borrowing some money to buy back some of its shares. It would borrow until the debt/assets ratio was 0.70. With that amount of debt it cost of debt capital would be 6%. What will be expected return on the equity after the transaction is completed?
MNO Inc. is an all equity firm. Its current WACC is 14%. The company is thinking about borrowing some money to buy back some of its shares. It would borrow until the debt/assets ratio was 0.70. With that amount of debt it cost of debt capital would be 6%. What will be expected return on the equity after the transaction is completed?
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