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Problem # 10 (10 points) show your work. Wellington Gas has a capital structure consisting of debt and common equity. Assume the following information: Debt
Problem # 10 (10 points) show your work. Wellington Gas has a capital structure consisting of debt and common equity. Assume the following information: Debt Weight of debt - 30% Cost of debt - 10% up to $1,500,000 Cost of debt - 12% over $1,500,000 Tax rate - 25 Equity Weight of equity - 70% Cost of internally generated fund - 16% Cost of issuing new common stock - 18% Retained Earnings - $2.800,000 a. Calculate both equity and debt breaks. b. Calculate the weighted average cost of capital before equity break. c. Calculate the weighted average cost of capital between the breaks
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