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Mimosa Machinery Inc has total market value of $20 million and total debt of $7.5 million (market and book value of debt are equal). The
Mimosa Machinery Inc has total market value of $20 million and total debt of $7.5 million (market and book value of debt are equal). The yield-to-maturity on Mimosa's bonds is 6.5%. The cost of capital with no debt is 8.5%. The tax rate is 34%. If there are no costs of financial distress, what is the WACC? (General M&M assumptions apply)
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