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I have a multiple choice question I need help with: Suppose Goodyear Tire and Rubber Company has an equity cost of capital of 8.3%, a

I have a multiple choice question I need help with:

Suppose Goodyear Tire and Rubber Company has an equity cost of capital of 8.3%, a debt cost of capital of 6.8%, a marginal corporate tax rate of 42%, and adebt-equity ratio of 2.8. Assume that Goodyear maintains a constantdebt-equity ratio.

a. What isGoodyear's WACC?

b. What isGoodyear's unlevered cost ofcapital?

c.Explain, intuitively, whyGoodyear's unlevered cost of capital is less than its equity cost of capital and higher than its WACC.

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