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Asses the cost of equity for the firm

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A firm has a leverage beta of 1.6 and a D/E ratio of 1. the firm long term target -leverage is D/E target = 0.5. Assuming that: the corporate rate is 50% the expected market return is 9% and free risk rate is 6%, asses the cost of equity for the firm under the target financial structure (hint: remember unlevering and levering)

Reference no: EM133109531

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