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A firm has a debt-to equity ratio of 1. Its cost of equity is 16 percent and its pretax cost of debt is 8 percent.

A firm has a debt-to equity ratio of 1. Its cost of equity is 16 percent and its pretax cost of debt is 8 percent. If there are no taxes or other imperfections, what would be its cost of equity if the debt-to-equity ratio were zero

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