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In the spring of last? year, Tempe Steel learned that the firm would need to? re-evaluate the? company's weighted average cost of capital following a
In the spring of last? year, Tempe Steel learned that the firm would need to? re-evaluate the? company's weighted average cost of capital following a significant issue of debt. The firm now has financed 40% of its assets using debt and 60% using equity. Calculate the? firm's weighted average cost of capital where the? firm's borrowing rate on debt is 7.8%, it faces a 35% tax? rate, and the common stockholders require a 19.5% rate of return.
Tempe? Steel's weighted average cost of capital is?
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