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To understand the advantage of debt capital from a tax perspective in the United States,determine the before-tax and approximated after-tax weighted average costs of capital

To understand the advantage of debt capital from a tax perspective in the United States,determine the before-tax and approximated after-tax weighted average costs of capital if aproject is funded 20%-80% (D-E mix) with debt capital borrowed at 9% per year. A recent studyindicates that corporate equity funds earn 12% per year and that the effective tax rate is34% for the year.

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