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2. FM Foods is evaluating its cost of capital. Use the following information provided on December 31, 2017, to estimate FMs after-tax cost of equity capital.
   • Yield to maturity on long-term government bonds: 4.4%
   • Yield to maturity on company long-term bonds: 6.3%
   • Coupon rate on company long-term bonds: 7%
   • Historical excess return on common stocks: 6.5%
   • Company equity beta: 1.20
   • Stock price: $40.00
   • Number of shares outstanding (millions): 240
   • Book value of equity (millions): $5,240
   • Book value of interest-bearing debt (millions): $1,250
   • Tax rate: 35.0%