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Dear all,
I am confused about the cost of equity(ungeared), the answer uses geared beta to get ungeared beta, then to get Ke. Why not use M&M method in the fomula sheet, which is
Ke= Ke(ungeared) + (1-T)(Ke(ungeared)-Kd)Vd/Ve ?
Can someone tell me the difference between the two method? thx!
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