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Problem 4: The total market value of the common stock of Company A is $8 million, and the total value of its debt is $2

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Problem 4: The total market value of the common stock of Company A is $8 million, and the total value of its debt is $2 million. The treasurer estimates that the beta of the stock is currently 1.5 and that the market risk premium is 6%. The Treasury bill rate is 4\%. Assume for simplicity that Company A debt is risk-free. The Company's tax rate is 35%. a) What is Company A's cost of equity? (2 Points) b) What are Company A's market weights for debt and equity? (2 Points) c) What is the pre-tax cost of capital for Company A? (2 Points) d) What is the WACC for Company A? (2 Points)

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