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What is the cost of the estate with and without taxes

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Question - "Vacation Hostels" finances the purchase of land for the construction of new hotels, its cost of capital, as a company totally financed by equity is 13% (its current cost of capital, as an all-equity company). The company is opening 10 new hotels and is considering issuing debt at a cost of 9% to cover its financing needs. If you issue debt, your D / E ratio will be 0.5, the corporate tax rate is 32%. What is the cost of the estate with and without considering taxes?

Reference no: EM132999768

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