4. Capital Structure (1). Suppose Microsoft has no debt and a WACC of 9.6%. The average debt-to-value ratio for the software industry is 9.5%. What
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4. Capital Structure
(1). Suppose Microsoft has no debt and a WACC of 9.6%. The average debt-to-value ratio for the software industry
is 9.5%. What would be its cost of equity if it took on the average amount of debt for its industry at a cost of
debt of 5.5%?

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