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Assume that a firm has weighted average cost of capital of 3.8% with a corporate tax rate of 21%. The pre-tax cost of debt is
Assume that a firm has weighted average cost of capital of 3.8% with a corporate tax rate of 21%. The pre-tax cost of debt is 3.4%. In case the firm would have no debt, the cost of equity for the firm would be 4.8%. However, the firm currently has a debt-to-equity ratio of 0.7. By how much would the WACC change if the firm would change their debt-to-equity ratio to 1.2? Please enter your result in percentage (e.g. increase in 3.5% would be 3.5) and round to one digit.,
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