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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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