Wildhorse Resources Company is currently an all-equity firm with a WACC of 17 percent and a 40 percent marginal tax rate. Wildhorse wants to move to a capital structure with $300 million of debt outstanding at an interest rate of 6 percent and a market value of equity equal to $900 million outstanding. Using M&M Proposition 2 with taxes, Equation 16.5, what is the expected return on equity at the new capital structure? (Round answer to 1 decimal place, e.g. 17.5%.) Expected return on equity enter the expected return on equity in percentages rounded to 1 decimal place %

Answer rating: 100% (QA)

Expected Return on Equity using MM Proposition 2 with Taxes We can ... View the full answer