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Suppose the Widget Company has a capital structure composed of the following, in billions: Market value of Debt: $10 Market value of Common Equity: $40

Suppose the Widget Company has a capital structure composed of the following, in billions:

Market value of Debt: $10

Market value of Common Equity: $40

If the before-tax cost of debt is 9%, the required rate of return on equity is 15%, and the marginal tax rate is 30%, what is Widgets weighted average cost of capital?

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