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Paton Corp. has no debt currently. However, they can borrow at 6.4 percent if needed. The firms WACC is currently 8.5 percent, and the tax
Paton Corp. has no debt currently. However, they can borrow at 6.4 percent if needed. The firms WACC is currently 8.5 percent, and the tax rate is 35 percent. (7 points)
- What is the companys cost of equity?
- If the firm converts to 25 percent debt, what will its cost of equity be?
- If the firm converts to 50 percent debt, what will its cost of equity be?
- What is the companys WACC in part (b)? In part (c)?
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Financial Intelligence For HR Professionals
Authors: Karen Berman, Joe Knight, John Case
1st Edition
1422119130, 978-1422119136
