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Somerset & Mills LLC has a target debt-equity ratio of 1.10. Its weighted average cost of capital (WACC) under a classical tax system is 7.20%

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Somerset & Mills LLC has a target debt-equity ratio of 1.10. Its weighted average cost of capital (WACC) under a classical tax system is 7.20% and the corporate tax rate is 35.00%. A) If Somerset & Mills's cost of equity is 12.00%, what is their pre-tax cost of debt? My answer is (Round your answer to two decimal places)

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