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The firm is financed by 60% equity and 40% debt. The 40% of the firm covered by debt consists of t he following three bonds
The firm is financed by 60% equity and 40% debt. The 40% of the firm covered by debt consists of t he following three bonds :
a. $ 1 million @ 6%
b. $ 2 million @ 9%
c. $ 3 million @ 7%
If the firm's marginal tax rate is 20%, calculate the firm's cost of debt and its cost of capital.
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