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Assume a normal firm in a steady economy. The before-tax cost of debt, is always less than the cost of equity, so the after-tax cost
Assume a normal firm in a steady economy. The before-tax cost of debt, is always less than the cost of equity, so the after-tax cost of debt will certainly be less than the cost of equity. Therefore, as long as the firm is not completely debt financed, the weighted average cost of capital will always be greater than after-tax cost of debt.
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