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A company has a target capital structure of 70% debt and 30% equity. If the company raises equity of less than $10 million, then its
A company has a target capital structure of 70% debt and 30% equity. If the company raises equity of less than $10 million, then its cost of equity is 12%. If the new equity issued is above $10 million, its cost of equity is 14%. The first break point in the cost of capital raised due to the change in the cost of equity is closest to:
Question 15 options:
| $33.33 million. |
| $14.29 million. |
| $10.00 million. |
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