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Consider a firm that has a debt - equity ratio of 1 / 2 . The rate of return for debt is 5 % and

Consider a firm that has a debt

-

equity ratio of

1 / 2 .

The rate of return for debt is

5 %

and the rate of return for equity is

13 % .

The corporate tax rate is

34 % .

What is the weighted average cost of capital? Enter your answer as a percentage and rounded to

2

DECIMAL PLACES. Do not include the percentage sign in your answer.

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