3. Given that the traction corporation has a 40% debt, 60% equitycapital structure and its WACC is 9.96%, find the required rate of return on equity. It is mentioned that the cost of debt before tax equals 9%, the tax rate is 40%. (Points: 2)
11.06%
13%
14.89%
8%
The information given is not sufficient to answer the question.

4. What effect will an increase in tax rate for a company have on the WACC? Assume that everything else remains the same.

(Points: 2)
It will reduce the WACC
It will increase the WACC
It will have absolutely no effect
It will first increase WACC, then decrease it.

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3. Given that the traction corporation has a 40% debt, 60% equity capital structure and its WACC is 9.96%, find the required rate of return on equity. It is mentioned that the cost of debt before tax equals 9%, the tax rate is 40%. (Points: 2) ...

Solution Summary

The expert examines traction corporation for required rate of returns. Traction corporation on equity is given.

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The risk-free (nominal) rate is 3% per year and that the requiredrate of return on the market is 10% per year.
Find the requiredrate of return.

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Hello,
Attached you will find two finance problems. Please show all the formulas and steps for both of the problems so that they can be understood completely.
Thank you
Finance Questions
1. Calculate the internal rate of return on the following projects. Make sure to include all calculator key strokes or show Excel wor

See attached file.
8- 1 EXPECTED RETURN
A stock's returns have the following distribution:
Calculate the stock's expected return, standard deviation, and coefficient of variation.
8- 3 REQUIREDRATE OF RETURN
Assume that the risk- free rate is 6% and the expected return on the market is 13%. What is the required