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Answer this question based on the following data for a global firm. average pretax cost of debt = 8 %, average cost of equity =

Answer this question based on the following data for a global firm.

  • average pretax cost of debt = 8 %,
  • average cost of equity = 13.6 %,
  • average tax rate = 40 %,
  • the firm raises funds by borrowing 20 million dollar and issuing equity in the amount of 30 million dollar.

The after-tax weighted average cost of capital of this firm is:

a. 10.08%

b. 11.36%

c. 13.60%

d. 4.8%

None of the answers in this question are correct.

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