A similar firm with no debt has a cost of equity of 12


ABC Drilling has debt with a market value of $200,000 and a yield of 9%. The firm's equity has a market value of $300,000, its earnings are growing at a 5% rate, and its tax rate is 40%. A similar firm with no debt has a cost of equity of 12%. Under the MM extension with growth, what would ABC Drilling's total value be if it had no debt?

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Finance Basics: A similar firm with no debt has a cost of equity of 12
Reference No:- TGS0632717

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