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Keyboard Chiropractic Clinics produces 300 000 of cash flow each year The firm has no debt outstanding and its cost of equity capital is 25 per cent The firm would like to repurchase 600 000 of

Keyboard Chiropractic Clinics produces €300 000 of cash flow each year. The firm 
has no debt outstanding, and its cost of equity capital is 25 per cent. The firm would like to repurchase €600 000 of its equity by borrowing a similar amount at a rate of 8 
per cent per year. If we assume that the debt will be perpetual, find the cost of equity 
capital for Keyboard after it changes its capital structure. Assume that Modigliani and 
Miller Proposition 1 holds.

Apr 16 2021 View more View Less

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