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You use a FCFF model to estimate the value of a firm's equity to be $15 billion. You then decide to move on to a
You use a FCFF model to estimate the value of a firm's equity to be $15 billion. You then decide to move on to a FCFE model, in which you assume a FCFE growth rate of 2%. You also see that the most recent value of FCFE is $1.2 billion. What would the cost of equity need to be for both free cash flow models to yield the same valuation? Put your answer in decimal form, and round it to four places. Your
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