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Task 4: The firm's capital structure is composed of 40% debt and 60% of equity. The firm's before-tax cost of debt is 7%, and cost
Task 4: The firm's capital structure is composed of 40% debt and 60% of equity. The firm's before-tax cost of debt is 7%, and cost of equity is 10%. The firm's marginal tax rate is 30%. Calculate the firm's weighted average cost of capital Question 1 Under the pecking order theory, what is the order in which firms will obtain financing? Why might firms prefer not to issue new equity? Question 2 Describe the implications of the static trade-off theory
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