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Suppose a firms capital structure consists of debt and common equity. The firm has a cost of equity of 14% and a pre-tax cost of
Suppose a firms capital structure consists of debt and common equity. The firm has a cost of equity of 14% and a pre-tax cost of debt of 9%. If the target debt/equity ratio is 75%, and the tax rate is 34%, what is the firms weighted average cost of capital (WACC or )?
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