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The market value of XYZ Corporation's common stock is $40 million and the market value of its risk-free debt is $60 million with the cost

The market value of XYZ Corporation's common stock is $40 million and the market value of its risk-free debt is $60 million with the cost of 3%. The beta of the company's common stock is 0.8 and the expected market risk premium is 8 percent. What is the firm's cost of capital? (Assume no taxes.)

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