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Malkin Corp. has no debt but can borrow at 6.5%. The firm's WACC is currently 10%, and there is no corporate tax.

Required:

(a) What is Malkin's cost of equity?

(b) If the firm converts to 30% debt, what will its cost of equity be?

(c) If the firm converts to 55% debt, what will its cost of equit be?

(d) What is Malkin's WACC in part (b) and part (c)?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M944703

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