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TBQ has a market capitalization of $19.7 million, and $5.3 million in outstanding debt. Suppose their beta is 1.4, the risk-free rate is 2%, and
TBQ has a market capitalization of $19.7 million, and $5.3 million in outstanding debt. Suppose their beta is 1.4, the risk-free rate is 2%, and the expected return of the market is 6%. TBQs debt cost of capital is 5% and their corporate tax rate is 30%. What is the after-tax debt cost of capital? Select one: a. 5.6%. b. 6.73%. c. 7.6%. d. 9.2%. e. 3.5%.
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