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What is the cost of equity for mullet inc

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If Mullet Inc were all equity, it's beta would be 1.1. The company has a target debt-equity ratio of 0.40. The expected retun on the market portolio is 13% and T-bills yield 7%. The company has one bond issue outstanding that matures in 20 years and has a 9% coupon rate. The bond currently sells for $975. The corporate tax rate is 34%.

Problem a. What is the cost of debt?

Problem b. What is the cost of equity?

Problem c. What is the WACC?

Reference no: EM132834270

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