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5. A firm has a before tax cost of debt of 8% and a debt-to-equity ratio of 40%. The company is subject to a 35%
5. A firm has a before tax cost of debt of 8% and a debt-to-equity ratio of 40%. The company is subject to a 35% tax rate and has a WACC of 12.5%. What is the cost of equity? a. 17% b. 9.30% c. 10.42% d. 9.03% e. 7.17%
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