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Homework answers / question archive / Remex (MIX) currently has no debt in its capital structure
Remex (MIX) currently has no debt in its capital structure. The beta of its equity is 1.78. For each year Into the indefinite future, Reinex, free CaSti nOw is expect. to equal $27 Remex consid.ing changing Its capital structure by issuing debt a. using the proceeds to buy b.k stock. It will do so in such a way that it will have a 2. debt.equity ratio after the change, and it will mathtain this debt-equity ratio forever Assume that Remex's debt.. or capital be 6.37%. Rernex faces a corporate. rate of 25%. Except for the corporate tax rate of 25%, there are no mar. imperfections. Assume that the CAPM holds. the risk-free rate of interest is 4... and expect. return on the market is 10.78%. a. Using the information provided, fill in the table be.. b. Using the information prowd. a. your calculations in part (a), determine the value of tne tax shiekl acquir. by Remex if it changes rts capital suucture in the way it is considering.
a. Using the information provided, fill in the table below. Using the information provided above, fill in the table below: (Round to three decimal places.)
Debt-Equity Debt Cost of Equity Cost of Weighted Average Cost Ratio Capital Capital of Capital
Before change in capital structure After change in capital structure
0 N/A 11%
0.26 6.37%
E% 111%