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Assume that a firm's capital structure consists of 40% debt and 60% equity. Further assume that the cost of debt and the cost of equity

Assume that a firm's capital structure consists of 40% debt and 60% equity. Further assume that the cost of debt and the cost of equity are 6% and 10% respectively.

a) What is the weighted cost of capital if the firm pays no taxes?

b) What is the weighted cost of capital if the firm is in the 20% marginal tax rate?

c) What is the weighted cost of capital if the firm is in the 3% marginal tax rate?

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