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At December 31,2017, Day-Brite Inc.s market value of equity was $8 billion and its total market value was $12 billion. Day-Brites assumed statutory tax rate
At December 31,2017, Day-Brite Inc.s market value of equity was $8 billion and its total market value was $12 billion. Day-Brites assumed statutory tax rate was 32%, its pretax borrowing rate was 4%, and its estimated market beta was .78. Assume also that the expected risk-free rate is 2.5% and the expected market risk premium is 5%. Estimate Day-Brites weighted average cost of capital.
4.2%
5.2%
3.9%
2.5%
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