1 true green has a cost of equity of 12 percent and a, Ask an Expert

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1. True Green has a cost of equity of 12 percent and a pretax cost of debt of 6 percent. The debt-equity ratio is .40 and the tax rate is 35 percent. What is the unlevered cost of capital?

2. An unlevered firm has expected earnings of $36,000 and a market value of equity of $400,000. The firm is planning to issue $250,000 of debt at 5 percent interest and use the proceeds to repurchase shares at their current market value. Ignore taxes. What will be the cost of equity after the repurchase?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92684043

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