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Given the following information for United Technologies Mega Corporation: Common stock: 1 million shares outstanding, $55 per share, $10 par value, beta = 1.5 Bonds:

Given the following information for United Technologies Mega Corporation:

Common stock: 1 million shares outstanding, $55 per share, $10 par value, beta = 1.5

Bonds: 10,000 bonds outstanding, $1,000 face value ach, 7% annual coupon, 20 years to maturity, market price = $1,101.23 per bond

Market risk premium = 8.6%, risk-free rate = 4.5%, marginal tax rate = 34%

Calculate the following(rounded to 4 decimal places):

  1. Capital structure weights at market value;
  2. Cost of equity;
  3. Pre-tax and after-tax cost of debt;
  4. Weighted average cost of debt.

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