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3. Company ABC has a debt-equity ratio of .40. The firms weighted average cost of capital is 15%, and the pretax cost of the firms

3. Company ABC has a debt-equity ratio of .40. The firms weighted average cost of capital is 15%, and the pretax cost of the firms debt is 6%. The tax rate is 35%.

a. What is the companys cost of equity capital?

b. What is the companys unlevered cost of equity capital?

c. What would the companys cost of equity capital be if the firms debt-to-equity ratio were 1.5?

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