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Our firm survives for the next 3 years and then it is dissolved ( no residual value ) . Each of these 3 years, it
Our firm survives for the next years and then it is dissolved no residual value Each of these years, it earns before interest and taxes $ie these are the only payoffs that shareholders will ever receive and has already depreciated its fixed assets. It draws of its financing from year bonds with face value $each that pay an annual coupon of $ and sell at par.
The firm has a beta of and faces a corporate tax rate of The risk free rate is and the expected market return is
What is the weightedaverage cost of capital of the firm?
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