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From the below figures, calculate WACC and annual cashflows required by its capital providers. Interest rate = 0.10 Statutory company tax rate = 0.30 Proportion

  1. From the below figures, calculate WACC and annual cashflows required by its capital providers.

Interest rate = 0.10

Statutory company tax rate = 0.30

Proportion of statutory company tax rate claimed by shareholders = 0.60

Market value of debt = 20 000 000

Cost of equity capital = 0.20

Market value of equity = 20 000 000

  1. What are the main difficulties in calculating cost of capital for diversified companies?

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