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Problem #1 (11 marks) ADL Inc. has an unlevered cost of equity is 12% with a pre-tax cost of debt of 7%. Both the book

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Problem #1 (11 marks) ADL Inc. has an unlevered cost of equity is 12% with a pre-tax cost of debt of 7%. Both the book and the market value of debt is $280,000. Earnings before interest and taxes are $98,000 and the tax rate is 35%. What is ADL's weighted average cost of capital? (Assume there is no cost of financial distress)

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