Question 5 5 pts Assume that the only market imperfection comes from corporate taxes, and that...

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Question 5 5 pts Assume that the only market imperfection comes from corporate taxes, and that a firm keepsa constant level of debt. The risk-free rate (r) is 5%, and the risk premium on the market (rm -rf) is 7%. The corporate tax rate is 35%. The asset beta of a firm is equal to 0.8. By how much does this firm's cost of equity (i.e., the required return on its equity) go up if it raises its debt-to-value ratio from 20% to 50%. Assume that the firm borrows at the risk-free rate at all debt levels. Question 5 5 pts Assume that the only market imperfection comes from corporate taxes, and that a firm keepsa constant level of debt. The risk-free rate (r) is 5%, and the risk premium on the market (rm -rf) is 7%. The corporate tax rate is 35%. The asset beta of a firm is equal to 0.8. By how much does this firm's cost of equity (i.e., the required return on its equity) go up if it raises its debt-to-value ratio from 20% to 50%. Assume that the firm borrows at the risk-free rate at all debt levels.