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Organization'stax-exempt debt currently requires an interest rate of 6.2 percent and its target capital structure calls for 60 percent debt financing and 40 percent equity

Organization'stax-exempt debt currently requires an interest rate of 6.2 percent and its target capital structure calls for 60 percent debt financing and 40 percent equity financing.The estimated costs of equity for selected investor-owned healthcare companies are given below:

Glaxo Wellcome15.0%

Beverly Enterprises16.4

HEALTHSOUTH17.4

Humana18.8

(a)calculate best cost of equity.

(b)calculate the corporate cost of capital.

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