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# Consider a firm financed using long-term debt with a value of $100 million and a before-tax cost of 4%. The firm also has 10 million shares outstanding at a price of $40/share. Assume the firm's cost of equity is 8% and its corporate tax rate is 20%. a. What is the total value of the equity? What is the total

Consider a firm financed using long-term debt with a value of $100 million and a before-tax cost of 4%. The firm also has 10 million shares outstanding at a price of $40/share. Assume the firm's cost of equity is 8% and its corporate tax rate is 20%.

a. What is the total value of the equity? What is the total firm value?

b. What is the firm's WACC?

a. What is the total value of the equity? What is the total firm value?

b. What is the firm's WACC?

**Related Book For**

## Financial Management Theory and Practice

15th edition

Authors: Eugene F. Brigham, Michael C. Ehrhardt

ISBN: 978-1305632295

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