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Calculate the cost of equity of the combined firm

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Calculate the cost of equity of the combined firm after the acquisition. In the deal, ACQ assumes all TAR's existing debts at market value, i.e. TAR's debt belongs to ACQ after the deal. Assume that ACQ's stock price at deal completion remains unchanged at $270 per share. The marginal tax rate for the merged firm is 40%. Clearly state any other assumptions if needed.

Reference no: EM133228380

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