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6 May 2019
Blumberg Inc. has an unlevered beta of 1.10. The firm currently has no debt, but is considering changing its capital structure to be 40% debt and 60% equity. Its corporate tax rate is 40%, r(RF) = 5% and the market risk premium is 4%. What is Blumberg's cost of equity? (Hint: Use the Hamada Equation and CAPM) please show how you get the answer
A. 10.76% B. 11.36% C. 10.56% D. 11.16% E. 10.96%
Blumberg Inc. has an unlevered beta of 1.10. The firm currently has no debt, but is considering changing its capital structure to be 40% debt and 60% equity. Its corporate tax rate is 40%, r(RF) = 5% and the market risk premium is 4%. What is Blumberg's cost of equity? (Hint: Use the Hamada Equation and CAPM) please show how you get the answer
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Bunny GreenfelderLv2
8 May 2019
