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A company is financed by 80% with equity (own capital). The of their equity is 1,2. The risk free rate is 4%, the market risk premium is 6%, all the debt is AAA rated and there are no taxes. The company decides to change its capital structure and increase its debt to 60%. Suppose that even after this increase, the debt remains debt without risk. Calculate the profitability required by the shareholders and the WACC of the company after the change of financial structure.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92865594

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