Abc Drilling Has Debt With A Market Value Of 200 000 And A Yield Of 9 The Firm S Equ 2659158

ABC Drilling has debt with a market value of $200,000 and a yield of 9%. The firm’s equity has a market value of $300,000, its earnings are growing at a 5% rate, and its tax rate is 40%. A similar firm with no debt has a cost of equity of 12%. Under the MM extension with growth, what would ABC Drilling’s total value be if it had no debt? What is the Cost of Equity:(a) 11.4%(b) 12.0%(c) 12.6%(d) 13.3%(e) 14.0%

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