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A company uses only common stock equity and debt financing its long term projects. The cost of debt has been determined as 12.4% before tax
A company uses only common stock equity and debt financing its long term projects. The cost of debt has been determined as 12.4% before tax while equity has a cost of 13.5%. The market values of debt and equity are, respectively, Kshs. 3,200,000 and Kshs. 6,800,000. Determine the weighted average cost of capital.
[6 marks]
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