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You are trying to value Like a Rolling Stone (LRS) and need to find LRSs cost of equity. You know that LRSs industry has a
You are trying to value Like a Rolling Stone (LRS) and need to find LRSs cost of equity. You know that LRSs industry has a cost of equity of 7%, a debt to equity ratio of 0.8, a cost of debt of 4%, and a tax rate of 40%. LRS has a debt to equity ratio of 1.75, a cost of debt of 4.5%, and a tax rate of 35%. Given this information, what is LRSs cost of equity? Equation: KSL = Ksu + (Ksu Kd)(1-T)(D/E)
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