Question: Question 2125%1 Goodwill Co. expects its return on assets to be stable at 15 percent, assuming a target capital structure of 70 percent equity and

Question 2125%1 Goodwill Co. expects its return on assets to be stable at 15 percent, assuming a target capital structure of 70 percent equity and 30 percent debt. Suppose that the rm's borrowing rate is 12 percent, for a wide range of capital structures. 3. Suppose that Goodwill pay tax for 30%. What is Goodwill's cost of equity?. What would Goodwill's cost of equity be if the target capital structure is 40 percent equity, 60 percent debt? Show that under both capital structures the nn's weighted average cost of capital (WACC) is the same and that it is equal to 15 percent. b. Suppose now that the firm's tax rate is 20 percent. What is the cost of equity and the WACC under the two capital structures? Why are the cost of equity and the WACC different under the two capital structures

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