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Enzo, Inc. has a target capital structure of 60% debt and 40% common equity and is in the 40% marginal tax rate. If Enzo's before-tax

Enzo, Inc. has a target capital structure of 60% debt and 40% common equity and is in the 40% marginal tax rate. If Enzo's before-tax cost of debt is 8% and cost of common stock is 18%, what is the firm's WACC?

(i) Describe and interpret the assumptions related to the problem.

(ii) Apply the appropriate mathematical model to solve the problem.

(iii) Calculate the correct solution to the problem. Submit all answers as percentages and round to two decimal places.

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