Solved by a verified expert :1. A firm has a debt-to-equity ratio of 1.00. Its cost of equity is 12%, and its cost of debt is 6%. If there are no taxes or other imperfections, what would be its cost of equity if the debt-to-equity ratio were 0?
2. Using the information above, what is the market value of equity if the market value of debt is currently $1,000,000 and the cost of equity (levered) is 10.5% ?
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