Question: Question content area top Part 1 Suppose PayPal (PYPL) has no debt and an equity cost of capital of 9.1%. The average debt-to-value ratio for

Question content area top

Part 1

Suppose PayPal (PYPL) has no debt and an equity cost of capital of

9.1%.

The average debt-to-value ratio for the credit services industry is

15.2%.

What would its cost of equity be if it took on the average amount of debt for its industry at a cost of debt of

6.4%?

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