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An Australian company has total assets of $150 million and debt of $30 million. The firms before-tax cost of debt is 5% and its cost
An Australian company has total assets of $150 million and debt of $30 million. The firms before-tax cost of debt is 5% and its cost of equity is 12%. If the corporate tax rate is 30%, calculate the firms cost of capital and the appropriateness of its use as a discount rate in capital budgeting.
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