Assuming a world of corporate taxes only, show that the cost of equity, RE, is as follows:

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Assuming a world of corporate taxes only, show that the cost of equity, RE, is as follows: RE = RU + (RU – RD) × (D/E) × (1 – TC).

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Essentials Of Corporate Finance

ISBN: 9780073405131

6th Edition

Authors: Stephen A. Ross, Randolph Westerfield, Bradford D. Jordan

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Question Posted: Apr 24, 2012 07:45 AM

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Assuming a world of corporate taxes only, show that the cost of equity, RE, is as follows:

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The return on equity is net income divided by equity Net income can be expressed as NI E...View the full answer

Essentials Of Corporate Finance

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