=+by the co-movement of its shares and the market index correctly reflects the risk adjust- ment necessary

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=+by the co-movement of its shares and the market index correctly reflects the risk adjust-

ment necessary to the average risk premium - this is 0.85. The corporate tax rate is 30 per cent. Burgundy has a net asset figure of £3.5m showing in its balance sheet.

Required a

Calculate the cost of debt capital.

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