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Wilson's has a cost of equity of 13.5 percent. The market risk premium is 9.4 percent and the risk-free rate is 0.7 percent. The company is acquiring a competitor, which will change the company's beta to 1.7. What effect, if any, will the acquisition have on Wilson's cost of equity capital?
a. no effectb. decrease of 1.92 percentc. decrease of 2.08 percentd. increase of 1.86 percente. increase of 1.99 percent
On the basis of the mentioned information you as a finance manager are asked to provide the following : Estimate the firms return on capital. What would be the reinvestment rate of the firm?
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