Question 71. Suppose that Mississippi Metal currently has no debt and has an equity cost...
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Question 71. Suppose that Mississippi Metal currently has no debt and has an equity cost of capital of 12%. Mississippi Metal is considering borrowing funds at a cost of 6% and using these funds to repurchase existing shares of stock. Assume perfect capital markets. If Mississippi Metal borrows until they achieved a debt-to-equity ratio of 50%, then Mississippi Metals levered cost of equity would be closest to: A. 10% B. 12% C. 15% D. 16% E. 17%
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