Multipliers fell sharply with onset of financial crisis

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1. Bear Down Investment Corp. has a target capital structure of 70% common stock and 30% debt. Its cost of equity is 18%, and the cost of debt is 5%. The relevant tax rate is 35%. What is Bear Down’s WACC?

2. Based on Figure 17.10 explain why the multipliers fell sharply with the onset of the financial crisis of 2007-2009. Why did they remain at this lower level after the crisis ended?

3. You will make $200 deposits every week into a retirement account for the next 20 years until you retire. If the account offers 0.15% per week, how much will you have in 20 years?

Reference no: EM131914148

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