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Quantitative Problem: Currently, Meyers Manufacturing Enterprises (MME) has a capital structure consisting of 35% debt and 65% equity. MME's debt currently has a 7.4% yield
Quantitative Problem: Currently, Meyers Manufacturing Enterprises (MME) has a capital structure consisting of 35% debt and 65% equity. MME's debt currently has a 7.4% yield to maturity. The risk-free rate (rRF) is 5.4%, and the market risk premium (rM rRF) is 6.4%. Using the CAPM, MME estimates that its cost of equity is currently 10.7%. The company has a 40% tax rate. a. What is MME's current WACC? Round your answer to 2 decimal places. Do not round intermediate calculations. Show All Feedback b. What is the current beta on MME's common stock? Round your answer to 4 decimal places. Do not round intermediate calculations. Show All Feedback c. What would MME's beta be if the company had no debt in its capital structure? (That is, what is MME's unlevered beta, bu?) Round your answer to 4 decimal places. Do not round intermediate calculations
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