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Q5: For example, let's assume that the buyer purchases a small business with 50% cash down payment (equity) and the balance (debt) being financed by
Q5: For example, let's assume that the buyer purchases a small business with 50% cash down payment (equity) and the balance (debt) being financed by the seller. Let's say that the cost of equity is 30% per year, the cost of debit is 8%, and the business tax rate is 30%. Then the weighted average cost of the capital used to purchase the business is
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