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What is the return on equity for company a

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Company A is a newly founded company that does not have any debt. Company B is an established company with assets identical to Company A. Company B's WACC is 10% , its debt-to-equity ratio is 2 and it keeps a constant amount of debt. Company B's debt has a beta of 0.5. The corporate tax rate is 15%, the risk free rate is 3% and the expected return on the market portfolio is 9%. What is the return on equity for Company A?

Reference no: EM132412406

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