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Question 2 (20 marks) a)-The-Win-Win company a major manufacturer of fitness products has a perpetual expected EBIT of $500,000. The interest rate for Win-Win's debt-is-7.5%.
Question 2 (20 marks) a)-The-Win-Win company a major manufacturer of fitness products has a perpetual expected EBIT of $500,000. The interest rate for Win-Win's debt-is-7.5%. The-D/E ratio is 0.33 and WACC is 11%. What is the cost of equity capital for Win-Win? (8. marks) b)-Suppose corporate tax rate is 30%, and Win-Win has $600,000 in debt outstanding." If the unlevered cost of equity-is-16%, what is the value of this company? What is the value of the firm's equity? (8 marks) c) How do you differentiate financial risks with business risks of a company? (5 marks)
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