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A firm with a D ? E ratio 0 . 2 5 ( i . e . , to fund assets, the firm uses $

A firm with a D ?E ratio 0.25(i.e., to fund assets, the firm uses $1 from debt for every $4 from equity), has outstanding bonds with a coupon rate of 10% that sell at par and a beta equal to 1. The risk-free rate is 5% and the expected market return is 15%. The corporate tax rate is 30%.
Estimate the firm's weighted-average cost of capital (WACC).
WACC
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