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Assume that your firm's marginal tax rate is 35% and that your firm has the following capital structure: Bonds coupon rate = 6% yield-to-maturity =

Assume that your firm's marginal tax rate is 35% and that your firm has the following capital structure:

Bonds

coupon rate = 6%

yield-to-maturity = 7.5%

Market value of bonds = $25 million

Book value of bonds = $30 million

Common stock

Book value of common shares = $25 million

Market value of common shares = $50 million

Required rate of return (r) = 12.60%

What is your firms Weighted Average Cost of Capital

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