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The common stock and debt of Northem Sludge are valued at $265 million and $35 million, respectively Investors currently require a 14% return on the
The common stock and debt of Northem Sludge are valued at $265 million and $35 million, respectively Investors currently require a 14% return on the common stock and an 5% return on the debt. Assume that the change in capital structure does not affect the risk of the debt and that there are no taxes It Northam Sludge issues an additional $10 million of common stock and uses this money to retire debt. what is the expected retum on the stock? (Round your answer to decimal places) Expected return on the stock References Worksheet Problem 15-14 Equity Return and Leverage (101) 16
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