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Q1: An unlevered firm has a cost of equity of 8%. It will now borrow at 4 % risk free rate, with D/V ratio of

Q1: An unlevered firm has a cost of equity of 8%. It will now borrow at 4 % risk free rate, with D/V ratio of 60 % in perpetuity. What is the WACC?

Q2: If the tax rate is 50 % and interest is tax deductible. What is WACC and cost of equity?

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