Capital Corporation targets equal debt and equity in its capital structure. Free cash flows to...
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Capital Corporation targets equal debt and equity in its capital structure. Free cash flows to the firm are a perpetual $200 per year. The cost of equity is 12%, cost of debt is 8%, and the tax rate is 50%. What is the present value of the interest tax shield? 500 700 600 800 The market risk premium is 9% and the risk-free rate is 2.5%. Nordstrom Inc. (JWN) and Hudson Bay Compamny (HBC) have betas of 0.54 and 1.44 respectively. What are the required returns of investing in JWN and HBC, according to CAPM? 6.0% and 11.9% 7.4% and 11.9% 6.0% and 15.5% 7.4% and 15.5%
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