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mooncalled mooncalled
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7 months ago
Toronto Skaters Company is an all-equity company and is able to fund a $1 million investment using cash. The company has a beta of 1.4, the risk-free rate is 3%, and the return on the market is 8%. Flotation costs for new equity are 3%. Ignore income taxes for this question. The appropriate cost of capital is

▸ 0% as the firm is using cash.

▸ the cost of equity taking into account the flotation costs.

▸ the required return on the outstanding equity.

▸ 0% as the firm is using funds that have already been raised from the capital markets.
Textbook 
Corporate Finance

Corporate Finance


Edition: 5th
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JaynieJaynie
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7 months ago
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mooncalled Author
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Thanks
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You make an excellent tutor!
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