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Suppose you invest $20,000 by purchasing 200 shares of Abbott Labs (ABT) at $50 per share, 200 shares of Lowes (LOW) at $30 per share,
Suppose you invest $20,000 by purchasing 200 shares of Abbott Labs (ABT) at $50 per share, 200 shares of Lowes (LOW) at $30 per share, and 100 shares of Ball Corporation (BLL) at $40 per share. Suppose over the next year Ball has a return of 10%, Lowes has a return of 11%, and Abbott Labs has a return of -5%. The % return on your portfolio over the year is O 7.6% O 12% O 2.8% O 6.7% A firm has a capital structure with $30 million in equity and $15 million of debt. The cost of equity capital is 8% and the cost of debt is 7%. If the marginal tax rate of the firm is 30%, compute the weighted average cost of capital of the firm. O 7.8% O 6.7% 7.0% O 8.6%
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