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Solve for the weighted average cost of capital. 13.00% Ki = cost of equity capital for a leveraged firm 5/7 = = debt-to-total- market-value ratio
Solve for the weighted average cost of capital. 13.00% Ki = cost of equity capital for a leveraged firm 5/7 = = debt-to-total- market-value ratio 8.0% = i = before-tax borrowing cost 40.0% = t = marginal corporate income tax rate If the federal government cut the marginal corporate income tax rate to 18%, what would happen to the debt to total market value ratio and what would the new WACC be? If the federal government raise the marginal corporate income tax rate to 18%, what would happen to the debt to total market value ratio
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