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If a firm has a cost of debt of 7.5% (with a market value of debt outstanding equal to $4,000,000) and a cost of equity

If a firm has a cost of debt of 7.5% (with a market value of debt outstanding equal to $4,000,000) and a cost of equity of 13.7% (with a current stock price of $10.3 and 1,000,000 shares outstanding).

What is the firm's weighted average after-tax cost of capital (given a 26% tax rate)?

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Solution The weighted average cost of capital is formula 810 WACC ... blur-text-image

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