Problem 19-04, Federated Junkyard WACC

Principles of Corporate Finance

Brealey, Myers, and Allen

13th Edition

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Difficulty – Medium

You are given the book value of debt and percent it is trading at, the yield to maturity, the shares of equity, the cost per share, the expected return, tax rate, and debt ratio. If the firm moves to a more conservative debt policy, calculate the new WACC using the three-step method.

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