You are given the following information about a firm: The firm expects to retain $160,000 in earnings
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The firm expects to retain $160,000 in earnings this year to invest in investment projects. If the firms capital budget is expected to equal $180,000, what required rate of return, or marginal cost of capital, should be used when evaluating investmentsprojects?
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Proportion of the Capital Structure 20.0% Type of Capital After-Tax Cost Debt 5.0% Common equiry-retained earnings 11.0 Common equity-new issue 80.0 14.0
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