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5. (Cash for Stock Merger) This problem requires that you integrate the material learned in prior chapters. You have been given the job of evaluating...

This question was created from WF113 CB W8 Practice Set Chapter 21,25 https://www.coursehero.com/file/15148835/WF113-CB-W8-Practice-Set-Chapter-2125/

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Risk free rate of return 4% Beta for this project (the company after merging) 1.07 Market risk premium 5% Pre-tax cost of debt 8% Marginal after tax rate 20% Number of shares outstanding for the target company (millions) 14 Current market price per share for the target company $51 Percentage of the acquisition financed with debt 34% Percentage of the acquisition financed with common equity 66% This is what the data should state

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Cost of debt after tax= 6.4% Cost of common equity= 9.35% WACC=... View the full answer

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