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Question: Owners of a small business want to expand. They intend to borrow the following: Share capital $300,000 Mortgage $400,000 Other Payables $50,000 line of
Question: Owners of a small business want to expand. They intend to borrow the following: Share capital $300,000 Mortgage $400,000 Other Payables $50,000 line of credit $80,000 The owner would receive 6% if they invest in investment securities. The after tax cost of capital for the line of credit is 7% and for the mortgage 6%. Calculate after tax cost of financing and after-tax weighted cost of capital.
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