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ABC overall cost of capital is 12% and has zero debt in its capital structure. It is considering a new capital structure with 40% debt.

ABC overall cost of capital is 12% and has zero debt in its capital structure. It is considering a new capital structure with 40% debt. The interest rate on the debt would be 4%. Assuming that the corporate tax rate is 30%, calculate the company's cost of equity capital with the new capital structure.

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