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Unida Systems has 36 million shares outstanding trading for $ 12 per share. In addition, Unida has $ 110 million in outstanding debt. Suppose Unida's
Unida Systems has
36 million shares outstanding trading for $ 12 per share. In addition, Unida has $ 110 million in outstanding debt. Suppose Unida's equity cost of capital is 16 %, its debt cost of capital is 8 %,
and the corporate tax rate is 38%.
a. What is Unida's unlevered cost of capital?
b. What is Unida's after-tax debt cost of capital?
c. What is Unida's weighted average cost of capital?
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