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Q18. We have the following information about the capital structure of a firm: Equity Information: .50 million shares $80 per share Beta-1.15 Market risk premium-9%

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Q18. We have the following information about the capital structure of a firm: Equity Information: .50 million shares $80 per share Beta-1.15 Market risk premium-9% Risk-free rate-5% Debt Information: $1 billion in outstanding debt (face value) * Current price 1100USD Coupon rate = 9%, e semiannual coupons 15 years to maturity The firm's tax rate is 40% So: A) What is the cost of debt? B) What is the cost of equity (using the CAPM)? C) What is the AFTER-TAX cost of debt? D) What are the capital structure weights? E) Compute the Weighted Average Cost of Capital (the WACC)

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