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A firm has zero debt and an overall cost of capital of 13.8 percent. The firm is considering a new capital structure with 40 percent

A firm has zero debt and an overall cost of capital of 13.8 percent. The firm is considering a new capital structure with 40 percent debt. The interest rate on the debt would be 7.2 percent. What would be the cost of equity with the new capital structure (no taxes or other imperfections)? What if there is a 34% corporate tax?

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