1 a firm has a debt-to-equity ratio of 1 its cost of equity, Ask an Expert

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1) A firm has a debt-to-equity ratio of 1. Its cost of equity is 12%, and its cost of debt is 6%. If there are no taxes or other imperfections, what would be its cost of equity if the debt-to-equity ratio were 0.

2) Using the information directly above, what is the market value of equity if the market value of debt is $1,000,000 and the cost of equity (levered) is 10.5%?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92269531

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