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A firms debt to equity ratio is 2. Its weighted average cost of capital is 25% and its cost of debt is 15%. The corporate

A firms debt to equity ratio is 2. Its weighted average cost of capital is 25% and its cost of debt is 15%. The corporate tax rate is 40%. The firm now changes its capital structure to consist only of equity. What is its new weighted average cost of capital?

A. 28% B. 32% C. Need to know the expected return on equity to determine the answer D. 34%

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