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Please answer using EXCEL ONLY!!! Other answers will not be accepted. I will upvote a correct answer 5. Budda Inc. is financed equally by debt
Please answer using EXCEL ONLY!!! Other answers will not be accepted. I will upvote a correct answer
5. Budda Inc. is financed equally by debt and equity, each with a market value of $1.5 million. The cost of debt is 5.5%, and the cost of equity is 10.5%. The company now makes a further $375,000 issue of debt and uses the proceeds to repurchase equity. This causes the cost of debt to rise to 6.0% and the cost of equity to rise to 13.83%. Assume the firm pays no taxes. A. How much debt does the company now have? B. How much equity does it now have? C. What is the overall cost of capital before and after the repurchase
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