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- Suppose ABC firm is currently all-equity financed and the total value of the firm is $90 million. The cost of equity is 18%, the

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- Suppose ABC firm is currently all-equity financed and the total value of the firm is $90 million. The cost of equity is 18%, the risk-free rate is 4% and then market risk premium is 10%. Assume no taxes. a) What are the values of the equity and the total value of the firm if the capital structure is changed to include $30 million of debt. b) If the cost of debt is 6%, then what is the new cost of equity? c) What is the weighted average cost of capital (rwacc)

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