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6 A firm is financed by 0.2 long-term debt and 0.8 common stockholders' capital. It has been established that both the common stockholders and the

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6 A firm is financed by 0.2 long-term debt and 0.8 common stockholders' capital. It has been established that both the common stockholders and the debt holders have a time value of money of 0.05. (We shall define this as being equal to their cost of capital.) The corporate tax rate is 0.4. Compute the average cost of capital. The common ctools

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