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Q5 Question 5 11 Points Assume that Modigliani and Miller's perfect capital markets assumptions hold and there are no corporate taxes. A company's cost of
Q5 Question 5 11 Points Assume that Modigliani and Miller's perfect capital markets assumptions hold and there are no corporate taxes. A company's cost of debt is 10%. Its cost of equity is 25% and its debt-to-equity ratio is 25% Q5.1 Question 5, Part (a) 5 Points Calculate the company's weighted average cost of capital. Show your calculations Enter your answer here Please selecties Select Q5.2 Question 5, Part (b) 2 Points How would the cost of equity change if the company's debt to equity ratio rises to 50%? Show your calculations Enter your answer here Please selecties Selections Q5.3 Question 5, Part (c) 4 Points Assume that the riskfree rate is 10% and the market risk premium is 7.5%. How has the company's equity beta changed with the debt-to-equity ratio changing from 25% to 50%? Show your calculations Enter your answer here Please selecties Selections
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