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A firm has determined its cost of each source of capital and optimal capital structure, which is composed of the following sources and target market
A firm has determined its cost of each source of capital and optimal capital structure, which is composed of the following sources and target market value proportions:
Long term debt has a 58% target weight and costs 10% (before tax); the tax rate is 40%. The rest is financed with Common Equity for which the firm estimates a cost of 15%. There is no preferred equity.
The weighted average cost of capital is
Group of answer choices
11.1 percent
9.8 percent
25 percent
12 percent
15 percent
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