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3.Suppose Martin Corporation currently has no debt and has an equity cost of capital of...

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Finance

3.Suppose Martin Corporation currently has no debt and has an equity cost of capital of 12%. Martin Corporation is considering borrowing funds at a cost of 6% and using these funds to repurchase existing shares of stock. Assume perfect capital markets. If Martin Corporation borrows until they achieved a debt-to-asset-value ratio of 20%, then what is the value of the levered cost of equity?

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