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A company is financed entirely by common stock and has a cost of equity of 12%. Now the firm decides to repurchase half of its

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A company is financed entirely by common stock and has a cost of equity of 12%. Now the firm decides to repurchase half of its shares and substitute an equal value of debt. The debt is risk-free, with an interest rate of 6%. The company is exempt from corporate income taxes. Assume MM in its pure form applies. Calculate the overall cost of capital (WACC), expressed as a percent to one decimal ()%

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