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The market value of Firm L's is $200,000 and its yield is 9%. The firms equity has a market value of 300,000, its earnings are
The market value of Firm L's is $200,000 and its yield is 9%. The firms equity has a market value of 300,000, its earnings are grwoing at a rate of 5% and its tax rate is 40%. A similar firm with no debt has a cost of equity of 12%. Under the MM extension with growth, what is Firm L's cost of equity?
12%, 12.6%, 11.4% or 14%.
Please kindly confirm your answer with the calculations as the previous answers provided by Chegg to this question are wrong (not listed among the above options). Thank you
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