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Problem 16-19 Leverage and the Cost of Capital (LO2) Dusit is financed 32% by debt yielding 8.2%. Investors require a return of 15.2% on Dusits

Problem 16-19 Leverage and the Cost of Capital (LO2)

Dusit is financed 32% by debt yielding 8.2%. Investors require a return of 15.2% on Dusits equity.

  1. What is the companys weighted-average cost of capital if the corporate tax rate is 21%?
  2. What would be the companys cost of capital if it were exempted from corporate tax?

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