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QUESTION. The common stock of company B has a beta of 0.9. The Treasury bill rate is 3%, and the market risk premium is estimated
QUESTION. The common stock of company B has a beta of 0.9. The Treasury bill rate is 3%, and the market risk premium is estimated at 6.0%. Company Bs capital structure is 30% debt, paying 5% interest rate and 70% equity. Company B pays tax at 21%. Calculate cost of equity and WACC for Company B. Present your answers in % format, rounding to two decimal points.
a. Cost of equity of company B
b. Weighted Average Cost of Capital
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