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Problem 10 A firm has market value of equity of $10M and market value of debt of $10M. Yield to maturity of its debt is

Problem 10

A firm has market value of equity of $10M and market value of debt of $10M. Yield to maturity of its debt is 10%, while the expected return of its stock is 20%. Assume that the tax rate is 0%. The WACC is given by:

A) 8%

B) 12%

C) 15%

D) 18%

E) 21%

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