All-equity firm-debt to retire equity

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Reference no: EM13911816

Assume Kang Inc. is a $1 billion all-equity firm with a tax rate of .2 and a beta of .8. The riskfree rate is 2% and the equity risk premium is 6%. What is its WACC?

Assume Kang Inc. is considering issuing .2 billion in debt to retire equity. This debt would have a yield of 4%. What is Kang’s new WACC?

Assume Kang Inc. is considering issuing .5 billion in debt to retire equity. This debt would have a yield of 6%. What is Kang’s new WACC?

Reference no: EM13911816

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