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Company C has a capital structure consisting of 60% equity and 40% debt. The before-tax cost of debt is 5%, while the cost of equity
Company C has a capital structure consisting of 60% equity and 40% debt. The before-tax cost of debt is 5%, while the cost of equity is 11%. If the appropriate weighted average tax rate is 21%, what would Company Cs Weighted Average Cost of Capital (WACC) be? How would your answer change if Company C is NOT able to make use of the interest tax shield?
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