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What Is the Expected Rate of Return to Equity Holders

question 6

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What is the expected rate of return to equity holders if the firm has a tax rate of 35%,the interest rate on debt is 10%,WACC is 15%,and the debt-asset ratio is 60%?


Definitions:

Standard Deviation

A statistic that measures the dispersion of a dataset relative to its mean and is calculated as the square root of the variance.

Coefficient Of Variation

A measure of relative variability calculated as the standard deviation divided by the mean, often expressed as a percentage.

Population Standard Deviation

A measure of the dispersion or spread of a set of values in a population, indicating how much variation exists from the average.

Variance

The measure of how far each number in the dataset is from the mean and from each other, indicating the spread of the distribution.

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