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M12-20. Estimating Cost of Debt Capital Assume that a companys financial statements report that its average outstanding debt totals $1.6 billion, and its total interest

M12-20. Estimating Cost of Debt Capital

Assume that a companys financial statements report that its average outstanding debt totals $1.6 billion, and its total interest expense equals $80 million. If its tax rate is 35%, compute its cost of debt capital.

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