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Gulf Coast Tours currently has a weighted average cost of capital of 11.3 percent based on a combination of debt and equity financing. The firm
Gulf Coast Tours currently has a weighted average cost of capital of 11.3 percent based on a combination of debt and equity financing. The firm has no preferred stock. The current debt-equity ratio is 0.58 and the aftertax cost of debt is 6.4 percent. The company just hired a new president who is considering eliminating all debt financin of capital be if the firm switches to an all-equity firm? g. All else constant, what will the firm's cost of s .58 A 10.45 percent B. 12.62 percentweIl3c c 12.89 percent 63 21 we- D. 13.37 percent E 14.32 percent -3s WACCz 0.113s (1/1.58)(tule58H:58)(0.061.0 2a x 14.32 percent
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