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1) Assume the total market value of General Motors (GM) is $10 billion. GM has a market value of $6 billion of equity and a

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1) Assume the total market value of General Motors (GM) is $10 billion. GM has a market value of $6 billion of equity and a face value of $12 billion of debt. What are the weights in equity and debt that are used for calculating the WACC? A) 0.30,0.70 B) 0.60,0.40 C) 0.40,0.60 D) cannot be determined 2) The after-tax cost of equity is the pretax cost of equity. A) higher than B) lower than C) the same as D) less than or equal to 3) Assume JUP has debt with a book value of $24 million, trading at 120% of par value. The firm has book equity of $28 million, and 2 million shares trading at $20 per share. What weights should JUP use in calculating its WACC? A) 41.86% for debt, 58.14% for equity B) 37.67% for debt, 62.33% for equity C) 33.49% for debt, 66.51% for equity

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