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Margo Corporation is a major producer of lawn care products. Its stock currently sells for $80 per share; there are 10.5 million shares outstanding. Margo also has 400,000 bonds outstanding ($1000 face value per bond). These 10-year bonds pay annually, have a current yield of 10% and trade at 90% of face value. The risk free rate is 8%, the market risk premium is 9%, and Margo has beta equal to 2. The corporate tax rate is 34%.
A. Margo is considering expansion of its facilities. Use the SML to determine the cost of equity.
B. Compute the WACC for Margo.
garth company acquired 70 of the outstanding common stock of brooks company on june 30 2011 for 331100. on that date
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