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Modigliani Co. has firm assets that are considered 50% more risky than the overall market. The firm's target capital structure is 60% equity and 40%
Modigliani Co. has firm assets that are considered 50% more risky than the overall market. The firm's target capital structure is 60% equity and 40% debt. If the expected market return is 9% and the risk-free rate is 3%, what is the expected return on Modigliani's equity? (Assume that the tax rate is 0%).
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