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QUESTION 3 The debt-to-equity ratio of a firm is 1. The interest rate on the debt is 5% and the cost of equity is 10%.

QUESTION 3

The debt-to-equity ratio of a firm is 1. The interest rate on the debt is 5% and the cost of equity is 10%. When the tax rate is 20%, what is the weighted average cost of capital for the company?

NOTE: Please write your answer in decimal form up to 2 decimal places.(For example, if the answer is 11%, report 0.11 as the answer).

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