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International Exchange has three divisions: A, B, and C. Division A has the least risk and Division C has the most risk. The firm has
International Exchange has three divisions: A, B, and C. Division A has the least risk and Division C has the most risk. The firm has an after tax cost of debt of 6.1 percent and a cost of equity of 14.3 percent. The firm is financed with 35 percent debt and 65 percent equity. Division A's projects are assigned a discount rate that is 3.1 percent less than the firm's weighted average cost of capital. What is the discount rate applicable to Division A?
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