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(6 points) The capital structure of a firm is as follows. Source of Capital % of Capitalization Interest Rate 35 7% Loans 40 8% Bonds

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(6 points) The capital structure of a firm is as follows. Source of Capital % of Capitalization Interest Rate 35 7% Loans 40 8% Bonds 25 10% Common Stock The combined federal and state income tax rate for the firm is 42%. Find the after-tax and before-tax costs of capital to the firm

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