Question: full solution Q3. Hose ple presently has a capital structure which is 30 per cent debt and 70 per cent equity. The cost of debt

full solution

Q3. Hose ple presently has a capital structure which is 30 per cent debt and 70 per cent equity. The cost of debt (i.e. borrowings) before taxes is 9 per cent and that for equity is 15 per cent. The firm's future cash flows, after tax but before interest, are expected to be perpetuity of 750,000. The tax rate is 30 per cent. Calculate the WACC and the value of the firm

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