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Assume a company has 6,000 outstanding shares currently being traded at NASDAQ for $12 a share. Further assume the company's cost of equity = 10.2%
Assume a company has 6,000 outstanding shares currently being traded at NASDAQ for $12 a share. Further assume the company's cost of equity = 10.2% based on the SML method and cost of debt (before taxes) = 5.5% based on a bank loan currently with $18,000 debt outstanding, and zero preferred stocks, what is the company's Weighted Average Cost of Capital? Use corporate tax rate = 21%.
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