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A us based company has a market value of its debt equal to $40 million and has 3 million outstanding shares of stock , each
A us based company has a market value of its debt equal to $40 million and has 3 million outstanding shares of stock , each selling for $20 per share. The company pays a 5% rate of interest on its debt and has a beta of 1.41. The corporate tax rate is 34%. The risk premium on the market is 9.5%. the current treasury bill rate is 1%. What is the firms weighted average cost of capital?
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