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What is the firms weighted-average cost of capital

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Assume that M&M's 1963 theory with tax holds. Assume also a 21% corporate tax rate. The beta of its equity is 1.6, the risk free intrest rate is 4%, and the market risk premium is 7%. the bonds are now yielding 8%.

Question 1: What is the firm's weighted-average cost of capital? how much of the firms value is accounted for by the debt generated tax shield?

Question 2: What is, what will the loss of the firm value if Duane S. Burg becomes an all equity- financed company

Attachment:- equity finaniced.rar

Reference no: EM132472725

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