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11. Consider a firm that would have a cost of equity of 12 percent if it were an all-equity firmm The firm has $4 million
11. Consider a firm that would have a cost of equity of 12 percent if it were an all-equity firmm The firm has $4 million of assets at market value. Suppose that it has S2 million of debt outstanding and that the cost of that debt is 8 percent. Calculate and demonstrate the weighted average cost of capital for this firm if it pays no taxes Calculate and demonstrate the weighted average cost of capital for this firm if it does pay taxes and the net tax advantage to debt is 20 cents per dollar of interest paid
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