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Business, 22.02.2020 03:35 adriana145

Recapitalization Currently, Forever Flowers Inc. has a capital structure consisting of 25% debt and 75% equity. Forever’s debt currently has a 7% yield to maturity. The risk-free rate is 6% and the market risk premium is 7%. Using the CAPM, Forever estimates that its cost of equity is currently 14.5%. The company has a 40% tax rate. What is Forever’s current WACC? What is the current beta on Forever’s common stock? What would Forever’s beta be if the company had no debt in its capital structure?

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Recapitalization Currently, Forever Flowers Inc. has a capital structure consisting of 25% debt and...
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