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Company ABC has $200B in debt, and $800B in common stock outstanding. Their interest cost on the debt is 10%. Their cost of common stock
Company ABC has $200B in debt, and $800B in common stock outstanding. Their interest cost on the debt is 10%. Their cost of common stock is 8%. Company ABCs tax rate is 25%. What is the weighted average cost of capital? (Use the table below to help with your calculations) (nearest number).
Capital | Capitalization Amount | Capitalization Ratio | Pre-Tax Cost | After-Tax Cost | Weighted Cost |
Debt |
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Equity |
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Total |
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Group of answer choices
7.90%
8.58%
6.74%
7.56%
7.13%
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