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Solid Construction Company has the following amounts of interest-bearing debt and common equity capital: Financing Dollar Interest Cost of Source Amount Rate Equity Short-Term Loan
Solid Construction Company has the following amounts of interest-bearing debt and common equity capital: Financing Dollar Interest Cost of Source Amount Rate Equity Short-Term Loan $300,000 10% Long-Term Loan $100,000 18% Equity Capital $600,000 22% Solid Construction is in the 30 percent average tax bracket. The after-tax weighted average cost of capital (WACC) for Solid is (a) 16.56%. (b) 16.84%. 17.12%. (d) 18.84%. None of the above.
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