Question
Suppose you have a firm with the following information (ignore financial distress costs): Total Firm value (with $5 million in Debt) = $15 million r0
Suppose you have a firm with the following information (ignore financial distress costs):
Total Firm value (with $5 million in Debt) = $15 million r0 = 11% Tax Rate = 30% rB = 10%
What is the Companys required rate of return on Equity? What is the Companys WACC? Estimate the value of this firm as an unlevered entity.
Now suppose this firm had only $5 million in debt to start off with.
What would have been the required rate of return for equity? What would have been the WACC?
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Supernatural Provision Living In Financial Freedom
Authors: Joan Hunter, Sid Roth
1st Edition
1641238232, 978-1641238236
