wu enterprise is a nogrowth company whose ebit is expected to remian constant at $2600,000 per year in future. all net income ispaid out as dividend and wsu can borrow a constant growth rate of 9%. if the firm issues all the proceeds to buy back ordinary shares, leaving the value of the firms assets constant . if no debt is used, the required rate of return on equity is 15% . the company pays tax rate of 40% in a classical tax system. assume that the assumptions of the modigilani miller model hold.

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Given that the reinvestment rate of the company is equal to its cost of capital So the r... View the full answer