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The current risk-free rate is 5.51% and the market is expected to return 7.55% per year. The company's beta is 1.57. The company expects to
The current risk-free rate is 5.51% and the market is expected to return 7.55% per year. The company's beta is 1.57. The company expects to pay 4.9% for its debt. The target capital structure for the company is 35% equity and 65% debt. The marginal tax rate is 21% plus 4% for state and local taxes (ISTR = 25%).
A. What is the after-tax cost of debt?
B. What is the cost of equity?
C. Calculate the WACC.
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