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Modigliani Co. has firm assets that are considered twice as risky as the overall market. The firm's target capital structure is 40% equity and 60%
- Modigliani Co. has firm assets that are considered twice as risky as the overall market. The firm's target capital structure is 40% equity and 60% debt. If the expected market risk premium is 8% and the risk free rate is 4%, what is the expected return on Modigliani's equity? (Assume that the tax rate is 0%).A.20%
- B.24%
- C.44%
- D.28%
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Financial Management Principles and Application
Authors: Arthur J. Keown, J. William Petty, David F. Scott, Jr.
10th edition
536514119, 536514110, 978-0536514110
