In Section 19.3 we proposed a three-step procedure for calculating WACC at different debt ratios. The MilesEzzell
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In Section 19.3 we proposed a three-step procedure for calculating WACC at different debt ratios. The Miles–Ezzell formula can be used for the same purpose. Set up a numerical example and use these two approaches to calculate how WACC changes with financial leverage. Assume T* = TC. You will get slightly different numerical answers. Why?
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Different values result because the MilesEzzell formul...View the full answer
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Related Book For 
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers
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