NSP is a publicly traded company with a D/E ratio of 0.7 . The cost...
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NSP is a publicly traded company with a D/E ratio of 0.7 . The cost of debt for NSP is 6%, and the unlevered beta is 0.9 . The yield to maturity of T-Bills is 3% and the market risk premium is 7%. (9 marks) a) What is the cost of equity of the levered firm? Assume all M\&M general assumptions hold. (6 marks) b) How does the cost of equity change if we impose a 30% corporate tax while the unlevered beta remains the same
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