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DEC Inc. recently hired you as a consultant to estimate the companys WACC. You have obtained the following information. (1) The firm's bonds have YTM

  1. DEC Inc. recently hired you as a consultant to estimate the companys WACC. You have obtained the following information. (1) The firm's bonds have YTM of 6%. (2) The companys tax rate is 40%. (3) The risk-free rate is 3.5%, the market risk premium is 6.5%, and the stocks beta is 1.1. (4) The target capital structure has a debt to equity ratio equals to 2. The firm uses the CAPM to estimate the cost of common stock, and it does not expect to issue any new shares. What is its WACC?

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