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Golden Gate Construction Associates, a real estate developer and building contractor in San Francisco, has two sources of long - term capital: debt and equity.
Golden Gate Construction Associates, a real estate developer and building contractor in San Francisco, has two sources of longterm capital: debt and equity. The cost to Golden Gate of issuing debt is the aftertax cost of the interest payments on the debt, taking into account the fact that the interest payments are tax deductible. The cost of Golden Gates equity capital is the investment opportunity rate of Golden Gates investors, that is the rate they could earn on investments of similar risk to that of investing in Golden Gate Construction Associates. The interest rate on Golden Gates $ million of longterm debt is percent, and the companys combined federal and state income tax rates amount to percent. The cost of Golden Gates equity capital is percent. Moreover, the market value and book value of Golden Gates equity is $ million. Required: Calculate Golden Gate Construction Associates weightedaverage cost of capital. Note: Round your answer to decimal place. ie should be entered as
Golden Gate Construction Associates, a real estate developer and building contractor in San Francisco, has two sources of longterm capital: debt and equity. The cost to Golden Gate of issuing debt is the aftertax cost of the interest payments on the debt, taking into account the fact that the interest payments are tax deductible. The cost of Golden Gates equity capital is the investment opportunity rate of Golden Gates investors, that is the rate they could earn on investments of similar risk to that of investing in Golden Gate Construction Associates. The interest rate on Golden Gates $ million of longterm debt is percent, and the companys combined federal and state income tax rates amount to percent. The cost of Golden Gates equity capital is percent. Moreover, the market value and book value of Golden Gates equity is $ million.
Required:
Calculate Golden Gate Construction Associates weightedaverage cost of capital.
Note: Round your answer to decimal place. ie should be entered as
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