A company has a beta of 1.4, a pretax cost of debt of 5%, and an effective
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A company has a beta of 1.4, a pretax cost of debt of 5%, and an effective corporate tax rate of 20%. The weight of the debt in its capital structure is 60% and the rest is equity. The current risk-free rate is 2% and the expected market return is 7.5%. What is the weighted average cost of capital for this company? Answer in percent, rounded to one decimal place.
Related Book For
Contemporary Financial Management
ISBN: 9780324289114
10th Edition
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
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