Messsn co a us firm borrows us funds at an interest rate of, Financial Management

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Messsn co a us firm borrows us funds at an interest rate of

Messsn Co. (a U.S firm) borrows U.S Funds at an interest rate of 10 percent per year. Its beta is 1.0. The long-term annualized risk-free rate I the United States is 6 percent. The stock market return the United States is expected to be 16 percent annually. Messan’s target capital structure is 40% debt and 60% equity. Messan Co. is subject to a 30% corporate tax rate. Estimate the cost of capital to Messan Co.

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Financial Management: Messsn co a us firm borrows us funds at an interest rate of

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Financial Management: Messsn co a us firm borrows us funds at an interest rate of

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