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Suppose that a firm has both a current and a target debt-equity ratio of 0.6, a cost of debt of 15.15 percent, and a cost
Suppose that a firm has both a current and a target debt-equity ratio of 0.6, a cost of debt of 15.15 percent, and a cost of equity of 20 percent. The corporate tax rate is 34 percent. Calculate the WACC. Suppose the firm is considering taking on a warehouse renovation costing RM50 million that is expected to yield cost savings of RM12 million a year for six years. Should the firm take on the warehouse renovation?
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