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The market value of Charter Cruise Company's equity is $15 million and the market value of its debt is $5 million. If the required rate
The market value of Charter Cruise Company's equity is $15 million and the market value of its debt is $5 million. If the required rate of return on the equity is 20 percent and that on its debt is 8 percent, calculate the company's cost of capital. (Assume tax rate is 35%.)
- A. 16.3 percent
- B. 14.7 percent
- C. 17 percent
- D. 20.5 percent
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