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solina solina
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6 years ago
Chelsea Corporation's cost of equity is 16% and it is 100% equity financed. If it can borrow enough money at 10% to buy back half of its stock, what would would happen to the cost of equity be under the original assumptions of the Modigliani and Miller Capital Structure Theorem.
A) It would remain at 16%.
B)  t would rise to 22%.
C) It would fall to 11%.
D) It would fall to 13%.
Textbook 
Financial Management: Principles and Applications

Financial Management: Principles and Applications


Edition: 13th
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Heavy Heart Thank you bio-forums! Heavy Heart
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David_hessDavid_hess
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