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Answer: B
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The following information relates to Company A's current capital structure:
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The risk -free rate is 3% and the return on the market portfolio is expected to be 10%.
The rate of corporate tax is 25%
Using the Capital Asset Pricing Model, calculate the cost of equity resulting from the proposed change to the capital structure.
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C. 10.1%
D. 9.3%
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D. 3
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