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An all equity firm has a required return on its equity of 15%, has 10 million shares outstanding, and pays no taxes. The shares are currently trading at $6.00 each. The firm is planning to borrow $9 million at 5% interest rate and use the borrowed funds to buyback a portion of its equity. find out the new value of the firm and the new required return on its equity if it goes through with the capital structure change.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M924049

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