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How much has the wacc of the firm changed

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Problem 1: A Firm has no debt and market capitalisation of $200 m. Investors demand a return of 15% on equity of unlevered firm. The firm buys back shares to decrease the share of equity in its capital structure to 80% by raising debt at 7%. The effective corporate tax rate is 35%. By how much has the WACC of the firm changed?

Reference no: EM132678821

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