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O Question 21 Asume that strmis optimal capital structure consists of 30% debt at a before-tax cost of debt (KD) of 8 percent, 10% preferred
O Question 21 Asume that strmis optimal capital structure consists of 30% debt at a before-tax cost of debt (KD) of 8 percent, 10% preferred stock at a cost of preferred (Kp) of 11 percent, and 60% stock at a cost of stock Kyot 15 percent, and that the firm's tax rate is 40%, giving the firm a WACC of . Now assume that investors supplied $10,000,000 of capital (the initial cost of the firm) and the firm is expected to give them a constant free cash flow of $1,800,000 every year thereafter. Based on this Information calculate the market value added for this firm
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